Can I move my cash isa to another provider

[CoolHands]

I have a barclays Direct Cash ISA – Issue 2 (whatever that means) http://www.barclays.co.uk/Savings/DirectCashISAnda... but haven't touched it in a year or two; with £5800 in it. It pays 0.8% which seems not very much. Can I move this to another 'new' isa with a better rate or what? I am normally quite intelligent but I really don't understand isa's for some reason. When I log in and look at my balance it won't allow me to transfer it into a different isa with them, if that means anything?

If I can transfer it to a better provider, anyone know who's paying good rate at the mo?

[The original Nick the Greek]

Yes.

Make sure it's a transfer, so it relates to the same tax year.

Sorry I don't know about the rates, I don't use deposits to invest.

[CaptainSlow]

Have a look at Virgin Money, I'm getting just over 1.5%.

[Ozzie Osmond]

Personal opinion -

Cash ISA is really IMO wasting a potentially valuable tax saving opportunity. Essentially,

• Cash returns are virtually nothing
• Savings outside an ISA therefore attract very little tax because tax on virtually nothing is even less than virtually nothing.
• "Tax Free" return of virtually nothing is still virtually nothing.

Example - cash ISA

£15,000 saved at 1%. Annual gross interest = £150
Tax saving for a 20% taxpayer = £30
Potential for capital gain? Zero

Example - stocks and shares ISA

£15,000 invested should these days give dividend return around 3%. Annual dividend = £450
Tax saving for a 20% taxpayer = £90
BUT - and this is the big one - big potential for TAX FREE capital growth.

Sure, your money is "at risk" in stocks and shares but with prudent investment the potential downside should be pretty limited. And the potential tax-free upside is enormous.

So, keep your savings outside the ISA and do your investing inside the ISA. I realise that for those with very modest money to deal with a cash ISA is probably better than no ISA and taxed savings, but watch out for ISA charges.

[The original Nick the Greek]

Ozzie Osmond said:

Personal opinion -

Cash ISA is really IMO wasting a potentially valuable tax saving opportunity. Essentially,

• Cash returns are virtually nothing
• Savings outside an ISA therefore attract very little tax because tax on virtually nothing is even less than virtually nothing.
• "Tax Free" return of virtually nothing is still virtually nothing.

Example - cash ISA

£15,000 saved at 1%. Annual gross interest = £150
Tax saving for a 20% taxpayer = £30
Potential for capital gain? Zero

Example - stocks and shares ISA

£15,000 invested should these days give dividend return around 3%. Annual dividend = £450
Tax saving for a 20% taxpayer = £90
BUT - and this is the big one - big potential for TAX FREE capital growth.

Sure, your money is "at risk" in stocks and shares but with prudent investment the potential downside should be pretty limited. And the potential tax-free upside is enormous.

So, keep your savings outside the ISA and do your investing inside the ISA. I realise that for those with very modest money to deal with a cash ISA is probably better than no ISA and taxed savings, but watch out for ISA charges.

There is no income tax advantage for a BR taxpayer within an ISA. The notional 10% tax paid cannot be reclaimed. Exactly the same as dividends received outside an ISor

The only advantage is for higher ot additional rate taxpayers.

[CoolHands]

Thanks all. Ozzie I am willing to put it in stocks and shares I realise that at the moment to me the cash isa is effectively just a way to stop me spending it on frivolous things. Can I transfer the whole amount into a stocks and shares isa? If so, is there any you could point me in the direction of. I suppose a tracker of some sort is the best idea if I don't have any opinion or knowledge of share markets.

[Ginge R]

From last autumn 2015, if you need access to ISA cash you're not then penalised if you then want to save more later on the same tax year. The only restriction is that you need to top up your ISA during the same tax year the withdrawal was made – if you don't it will count towards your new allowance.

Expanding on Ozzie's point, the new personal savings allowance will take nearly everyone out of paying tax on £1000 of savings interest altogether when it's launched this April (£500 for HR tax payers and zero above that). With the personal income allowance increasing too, and with a £5000 divi allowance, with careful management, tax should fall for retirees.

The new allowance will call into doubt the need for a cash ISA (for many). An ISA now allows tax efficiency to be bequeathed too though of course; just one reason of many to keep them in mind.

[Ozzie Osmond]

CoolHands said:

Can I transfer the whole amount into a stocks and shares isa? If so, is there any you could point me in the direction of. I suppose a tracker of some sort is the best idea if I don't have any opinion or knowledge of share markets.

As a beginner you might find Hargreaves Lansdown useful. They have a good website and are very accustomed to dealing with small retail customers. Yes, you could find a tracker fund of some sort or just buy one of the mainstream actively managed funds. HL should be able to take a transfer of your cash ISA and deal with the re-investment. Have a chat to them; they are very approachable.
http://www.hl.co.uk/