ISA question

[Z064life]

Hi,

I have a current account with HSBC, and whom I opened an e-ISA with. This has £5,000 in it (the limit at the time I opened this, a few yrs ago). It's also easy access.

The interest rate is not great, and Tesco do a better deal for the new £15k super ISA, which I'd like to open. Question is, can I have more than one ISA? The existing HSBC one with 5k and another with 15k? Or do I need to transfer from HSBC to Tesco?


Thanks

[Shambler]

Your allowed to open a new ISA every year.

[davepoth]

However, Tesco might not allow transfers in. That won't be an issue if you want to invest less than a total of £15,000 though - just take it all out and put it into the new one.

[Steve Evil]

davepoth said:

However, Tesco might not allow transfers in. That won't be an issue if you want to invest less than a total of £15,000 though - just take it all out and put it into the new one.

Just to add a little more to Dave's post, don't literally draw it out and put it back in the Tesco one, arrange for it to be transferred, otherwise you'll be taxed on it again when it goes into the Tesco ISA. If you transfer it properly you won't be taxed a second time.

[droopsnoot]

Steve Evil said:

otherwise you'll be taxed on it again when it goes into the Tesco ISA. If you transfer it properly you won't be taxed a second time.

Surely that should read "otherwise it will count towards your ISA contribution limit for the current tax year"? Tax would only be payable if you withdraw it, keep it in a holding account for long enough to earn some interest, and even then only payable on the interest.

Definitely agree that it should be transferred if possible so as to avoid it counting as a new contribution, one of the Tesco ISAs seems to allow this but I don't know if they all do. I'd advise approaching Tesco (if you're sure they are the place you want to transfer it to) - when I transferred one from somewhere to Nationwide, I went into NW, gave them the account details of the other account, signed a form, and they dealt with opening the new account and grabbing the old ISA balance.

Edited by droopsnoot on Monday 24th November 12:50

[Mr Pointy]

Steve Evil said:

Just to add a little more to Dave's post, don't literally draw it out and put it back in the Tesco one, arrange for it to be transferred, otherwise you'll be taxed on it again when it goes into the Tesco ISA. If you transfer it properly you won't be taxed a second time.

Please explain why there any tax implication to withdrawing funds from an ISA & then re-investing them in another one.

[Steve Evil]

Mr Pointy said:

Steve Evil said:

Just to add a little more to Dave's post, don't literally draw it out and put it back in the Tesco one, arrange for it to be transferred, otherwise you'll be taxed on it again when it goes into the Tesco ISA. If you transfer it properly you won't be taxed a second time.

Please explain why there any tax implication to withdrawing funds from an ISA & then re-investing them in another one.

I've more than likely got that part wrong, I just remember having it drilled into me that you should never draw the money out yourself if you're moving it into another ISA immediately, as you lose all the tax benefits from it, but arrange for it to be transferred properly.

[hornet]

My understanding is that a transfer from another ISA does not count towards your current year's allowance, as it is not new money. In the scenario given by the OP, if he transfers to the new ISA, he will still have the £15k 2014/5 allowance, as no new deposit has occurred, just a change of institution, but if he closes the old one, putting £5k into the new ISA will count as a deposit and would reduce his remaining allowance down to £10k, so a loss of tax free allowance.

[Simpo Two]

Steve Evil said:

I've more than likely got that part wrong, I just remember having it drilled into me that you should never draw the money out yourself if you're moving it into another ISA immediately, as you lose all the tax benefits from it, but arrange for it to be transferred properly.

This. It has to be transferred properly not sold to cash.

[jfbrin]

hornet said:

My understanding is that a transfer from another ISA does not count towards your current year's allowance, as it is not new money. In the scenario given by the OP, if he transfers to the new ISA, he will still have the £15k 2014/5 allowance, as no new deposit has occurred, just a change of institution, but if he closes the old one, putting £5k into the new ISA will count as a deposit and would reduce his remaining allowance down to £10k, so a loss of tax free allowance.

Precisely.