ISAs

  morddwyd 08:48 25 Apr 11
Locked

I'm a bit confused, so not seeking advice, just clarity!

If I transfer an existing ISA to a new provider do the funds count towards this financial year's limit, or do I start from zero (assuming no subscriptions yet this year)?

Can't seem to find a definitive answer on-line, so would be grateful for some help.

  onthelimit1 09:16 25 Apr 11

I think you'll find your answer with the Moneysaving expert link text

  QuizMan 09:23 25 Apr 11

They do NOT affect this year's limit

  morddwyd 09:42 25 Apr 11

Bit suspicious of that link.

It says "*never, ever, withdraw money from an ISA *" but I do this every three months or so without penalty.

But thanks for the help

  natdoor 09:58 25 Apr 11

The point that money should not be withdrawn from an ISA relates to the fact that it cannot be subsequently put back. If you wish to transfer from one provider to another it must be done by the transfer process and not by taking the money out from one account and opening another.

Of course, if you wish to take money from an ISA account to meet your needs that is OK. But you can only invest in a curent year's ISA and can only put in £5,210, I believe, and this can be via payments over time. Once that limit of payments into the account is reached, no further investment is permitted, even if money has been withdrawn.

Many people have the highest regard for that site.

  onthelimit1 13:38 25 Apr 11

Yes - the Moneysavingexpert site gives good, professional advice.

  oresome 13:42 25 Apr 11

This years limit is £5340 for a cash ISA.

To transfer previous years savings to a new provider, you must ask the new provider to arrange the transfer.

Previously this could take an age, but this year following criticism from the FSA it seems much quicker if my experience is anything to go by. (little more than a week)

  morddwyd 19:16 25 Apr 11

"The point that money should not be withdrawn from an ISA relates to the fact that it cannot be subsequently put back"

But that's not what it says.

It says, in big bold script "Never, ever, ever, ever withdraw money from a cash ISA!

You'll immediately lose all the tax benefits."

That, to me, is bad advice, even if the site is ever so highly regarded.

  iscanut2 19:50 25 Apr 11

When you transfer ISA funds from one provider to another, this does not affect your current years limit. You are still free to invest up to £5340 ( I think !) into a new cash ISA for the current tax year.

  natdoor 21:27 25 Apr 11

Yes. But that is in the section on transfer ISAs. In that context it is correct.

  Simsy 12:34 27 Apr 11

The advice that's being criticised needs to be put into context... The quote is either of a couple of other sentences;

"...Yet as long as you abide by the golden ISA transfers rule, it should go smoothly.

"Never, ever, ever, ever withdraw money from a cash ISA! You'll immediately lose all the tax benefits."

Instead speak to the new provider and fill out a transfer form..."

That advice is specifically referring to taking the money out in order to tranfer it to another ISA. In this context the advice is perfectly sound!

It is only in the contect that it's giving this advice.

Regards,

Simsy

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