daft question about ISAs

slinxy · 15 Jul 2009 at 11:44

HI

I just opened an ISA account and put in the maxuim about possible in this tax year. I query is, come next tax year can I open another isa account and put the maxium allowed in to that, whist keeping the one I opened this year?

Thanks

platypus · 15 Jul 2009 at 11:45

krooton · 15 Jul 2009 at 11:45

I think you are only allowed one ISA per person.

platypus · 15 Jul 2009 at 11:45

krooton said:
I think you are only allowed one ISA per person.

Nope. One ISA per tax year, that is all.

mame · 15 Jul 2009 at 11:46

I think you can have one ISA. You can put the maximum in again next year anyway.

platypus · 15 Jul 2009 at 11:48

mame said:
I think you can have one ISA. You can put the maximum in again next year anyway.

platypus said:
Nope. One ISA per tax year, that is all.

krooton · 15 Jul 2009 at 11:49

platypus said:
Nope. One ISA per tax year, that is all.

I mean you can only contribute to 1 ISA in a tax year, making owing a bunch illogical.

So you fill up ISA1 to the £3,600.
Next year you open ISA2, you can only put money in one of the two.

Unless I've totally misunderstood the stuff I've read in the past, lol.

slinxy · 15 Jul 2009 at 11:50

see this is where the confussion comes into it... as from what I understand I can open new isa account each year and put the maxium in to it. so say next year I can have you isa accounts earning me interest (when it goes up hopefully) tax free as long as I dont add cash into more than one isa per year. Else whats the point of opening one this year as intrest is so low when I can open one next year.

Majago · 15 Jul 2009 at 11:52

mame said:
I think you can have one ISA. You can put the maximum in again next year anyway.

Platypus is right.

You can open 1 ISA per year and are only allowed to pay into that ISA for the year. The following (and subsequent) years however you can either reopen that ISA and pay into it or open a new ISA and pay into that whilst keeping the original ISA.

You could also transfer the balance into a new ISA and pay in the allowance on top as I don't think transfers count towards the yearly limit.

platypus · 16 Jul 2009 at 12:24

Majago said:
You could also transfer the balance into a new ISA and pay in the allowance on top as I don't think transfers count towards the yearly limit.

Some do, depends on their terms and conditions

.

(It's not a legal requirement, some banks just count a transfer in as your allowance for that year).

loltim · 16 Jul 2009 at 12:36

Wouldn't you be better adding £3600 to your £3600 next year? Rather adding it to a different ISA?

pallys · 16 Jul 2009 at 12:40

Tim said:
Wouldn't you be better adding £3600 to your £3600 next year? Rather adding it to a different ISA?

No because you can usually get a better rate elsewhere.

More confusion:

You are only allowed to open 1 ISA per year, not tax year.

^ Is that true?

Ie. Open ISA in July. Come April 2010, you cannot open another ISA and put in another £3.6K. You have to wait till July 2010.

:confused:

platypus · 16 Jul 2009 at 12:48

pallys said:
No because you can usually get a better rate elsewhere.

More confusion:

You are only allowed to open 1 ISA per year, not tax year.

^ Is that true?

Ie. Open ISA in July. Come April 2010, you cannot open another ISA and put in another £3.6K. You have to wait till July 2010.

No it runs on the fiscal year. So April the 6th through to April the 5th.

pallys · 16 Jul 2009 at 12:48

pallys said:
No because you can usually get a better rate elsewhere.

More confusion:

You are only allowed to open 1 ISA per year, not tax year.

^ Is that true?

Ie. Open ISA in July. Come April 2010, you cannot open another ISA and put in another £3.6K. You have to wait till July 2010.

OK I've checked this out, you are allowed an ISA every tax year.

Zogger · 16 Jul 2009 at 12:54

slinxy said:
see this is where the confussion comes into it... as from what I understand I can open new isa account each year and put the maxium in to it. so say next year I can have you isa accounts earning me interest (when it goes up hopefully) tax free as long as I dont add cash into more than one isa per year. Else whats the point of opening one this year as intrest is so low when I can open one next year.

I spent a while trying to decipher this and I'm not sure I managed

... You will have two cash ISAs earning interest next year if you open one this year and another one next year and don't transfer one over.
Every year that you don't put money into an ISA you are losing the tax-free allowance for that money.
If you put the money in now, when the interest rate goes up you will have an extra £3600 from this year earning tax free interest next year, and the same for the following year etc etc, which will probably add up in the long term, with the compound interest on top.

And obviously you won't earn any interest on the money now if you don't put it into some sort of savings account... Most standard cash ISAs are variable rate interest anyway so they will linger around the base rate. Many of them pay interest monthly which you will miss out on by leaving the money sitting around elsewhere.
If you find an ISA with a better interest rate which allows proper transfers in you can transfer at any point anyway, but you could potentially lose a lot of interest if you do it at the wrong time (e.g if interest is paid yearly on the old one and you transfer in the middle of the year)