General Chat Thread, Cash ISAs in General; Does anyone know the ins and outs of cash ISAs?
I have one cash ISA now, and I was always ...
3rd February 2009, 12:01 PM #1
Does anyone know the ins and outs of cash ISAs?
I have one cash ISA now, and I was always under the impression you can only ever have one cash ISA per person. Everywhere I read it was a slightly different story, so in the end google led me to HMRC (revenue and customs).
According to that, it says you can only open one ISA per tax year, but there is no limit as to the amount you have open over time.
So I'm assuming this means if I were to open one now, I could then open another one in April as it's a new tax year?
I'm waiting to see my bank to find out exactly where I stand but was wondering if anyone had some better info for me?
I've just found this on the HMRC site too:
So is that saying you could have 3 ISAs open, but only allowed to invest in one per year?
For cash ISAs, an individual can invest up to £3,600 a year, and can only invest with one provider in any one tax year.
Last edited by MK-2; 3rd February 2009 at 12:04 PM.
3rd February 2009, 12:08 PM #2
In the UK there are two types of ISA - CashISA and e-ISA. They're essentially the same thing, however e-ISAs offer a slightly higher rate of interest and is managed through your online banking facility (whichever bank you're with).
You're correct in saying that you can open a new ISA every tax year, however you're just as well to top up your existing ISA by a maximum of £3600, per tax year. At the moment I am getting absolutely rubbish return from my ISA due to the reduced interest rate, however this is tax free and will of course go up eventually...
3rd February 2009, 12:09 PM #3
From what I understand: You can deposit as many times into as many ISAs as you have, but the total you can deposit across all of your own ISAs is £3,600 in the tax year.
Originally Posted by MK-2
More info here.
3rd February 2009, 12:14 PM #4
You are correct, in fact the amount of stuff these companies need from you to open up an ISA in the first place its easier when you open a new one just to leave a fiver in the old so that when it might have a decent rate in a couple of years time you can move your money to it.
3rd February 2009, 12:19 PM #5
MoneySavingExpert - Excellent article
Rather than have many ISAs, you'd be best to get 1 with the highest interest that allows you to transfer money in from your other ISAs, thus you are maximising your interest accrued on your savings.
Annually every adult has an ISA allowance of £7,200, the interest of which is not taxed. However, only £3,600 can be made up of cash investment. Every April 6th the ISA allowance is renewed.
There is no difference between a Cash ISA and an eISA, in most cases an eISA is a Cash ISA which can be operated online.
3rd February 2009, 12:23 PM #6
(disclaimer: I am not a lawyer, banker or customs officer.)
My understanding is that you can have dormant ISAs, but you can only pay into one of them in any one tax year, i.e. between one April and the next. However, I think you'll find most banks will ask you to declare whether you have one anywhere else, so that if there's trouble they can't be implicated.
Originally Posted by MK-2
3rd February 2009, 12:40 PM #7
So I couldn't go to my bank and ask to open a second ISA in there?
I only ask because my mum passed away last year and on my banks advice I put the money she left me in a 30 day reserve account meaning I cannot access it unless I give 30days notice. But the interest rate on this is poor (even in the current climate), so was seeing if I could open an ISA now, deposit the full amount, then in April open another one and deposit that, but also top up the first one. So that way I am getting a higher interest rate, and topping up all my ISAs.
If I can only pay into one ISA per tax year, this changes how I would think of things of course
Thanks for all your help guys
3rd February 2009, 12:46 PM #8
If you've already opened an ISA this tax year and topped it up to the maximum £3600, you'll have to wait until April 2009. I would then recommend you top it up by another £3600.
As for the remaining money, simply move it to any account which provides you more interest.
3rd February 2009, 12:51 PM #9
Have you already opened an ISA this year? If not, you can open one now and you have an allowance of £3600 between now and April 5th.
On April 6th you have a renewed allowance of £3600 which you can place in any of your ISAs, however, consolidating into 1 ISA with the highest interest is the most sensible thing to do.
If you can't open another this year. Top up the ISA you have now (up to an amount of £3600 for the entire year). Then in the new financial year open a new ISA with top interest payment which allows you to transfer in balances from other ISAs. Most allow you to do this...however, it is a formal process don't just take the money out of the old ISA and try and put it in the new ISA...there are proper transfer forms to fill out.
Transfer your Cash ISAs: Boost the interest to 3.6% on past & present years...
Read this ^ and a few relevant links on MoneySavingExpert and all will become clear.
3rd February 2009, 12:53 PM #10
No this is what I'm saying. I haven't opened an ISA this year (the one I currently have is about 8 years old). So could I open an ISA now, put in 3600, then in April open another one, put in 3600 but also put in 3600 in the one i opened this year, or am i only allowed to pay into one isa per year?
Originally Posted by Michael
3rd February 2009, 01:06 PM #11
No. You can only deposit £3,600 in any cash ISAs per year.
Originally Posted by MK-2
Open an ISA now and deposit up to £3,600 before April. In April, you can either: a) Open another one; or b) Deposit up to £3,600 in the one you already opened. If you reached your limit of £3,600, uou must then wait until the following year until you could deposit an amount again.
3rd February 2009, 01:09 PM #12
or you could keep the same isa each year and put in your £3600.
The rules are fairly simple, you can put 3600 into an isa each year. this can be an existing one or a new one. you can also consolidate your isa if your new isa providor allows it.
3rd February 2009, 01:16 PM #13
Right OK, that was the main crux of this. I wanted to be able to separate the money I got from my mum into ISAs but if I can only pay 3600 in total per year, that won't work.
I know the current climate means savings interest is really low, but some are ridiculously low so I guess I'll have to just shop around
Cheers again for the help
3rd February 2009, 01:17 PM #14
Sounds like you need to consult a financial advisor who will be able to give you some ideas how best to maximise your savings.
Originally Posted by MK-2
3rd February 2009, 01:21 PM #15
In that case, this might work (in theory, at least) - put an initial amount into a new ISA, and the rest into a savings account of the best deal you can find. Each year you could move £3,600 from the savings account into the ISA, purely to get more interest. Repeat until savings account is empty.
Some savings accounts will give you more interest if it is long-term or you deposit a large sum at once - so it's good to shop around (your bank, ING Direct etc) or as morstar suggests - a financial advisor might help.
NatWest have recently advertised on TV that they give free impartial advice in their branches.
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