[Finance] ISA allowance question.

[Paulie Gualtieri]

Just sorted some finances out for my mum and she has a 3 year fixed cash ISA maturing next week and has been offered a decent transfer to a new 1 year fixed cash ISA which I am keen to proceed with.

The original £20k invested is now worth £22k and she have been offered the option to invest the full balance of £22k into the next ISA.

I was under the impression that the ISA allowance was up to £20,000 per annum, but does this exclude previous ISA interest earned, if it hasn’t been pulled out of the ISA? If this is true is there an upper limit (including earned ISA interest?

Thanks for any advice

 

[schmunk]

Transfers between ISAs of the same type don't count towards the annual contribution limit, but you can't withdraw and then reinvest.

 

[Paulie Gualtieri]

Transfers between ISAs of the same type don't count towards the annual contribution limit, but you can't withdraw and then reinvest.

Thanks for confirming.

So none of the £22,000 would count towards the annual contribution limit for this tax year and she could open a new additional £20,000 limit ISA for the current tax year as well? Sorry if I am reading this wrong!

 

[Doonhamer7]

Transfers between ISAs of the same type don't count towards the annual contribution limit, but you can't withdraw and then reinvest.

I have in the past transferred between different types of ISA - cash moved to shares.

 

[dazzer6666]

Thanks for confirming.

So none of the £22,000 would count towards the annual contribution limit for this tax year and she could open a new additional £20,000 limit ISA for the current tax year as well? Sorry if I am reading this wrong!

Correct

 

[Eeyore]

Thanks for confirming.

So none of the £22,000 would count towards the annual contribution limit for this tax year and she could open a new additional £20,000 limit ISA for the current tax year as well? Sorry if I am reading this wrong!

ISA transfer rules explained

ISA transfer rules explained. How do ISA transfers work & how to get the best rate when transferring your Cash and Stocks and Shares ISAs.

moneytothemasses.com

 

[Paulie Gualtieri]

ISA transfer rules explained

ISA transfer rules explained. How do ISA transfers work & how to get the best rate when transferring your Cash and Stocks and Shares ISAs.

moneytothemasses.com

Thanks

 

[Cheshire Cat]

Make sure she actually does a transfer and not a withdrawal and redeposit.

 

[Shropshire Seagull]

Thanks for confirming.

So none of the £22,000 would count towards the annual contribution limit for this tax year and she could open a new additional £20,000 limit ISA for the current tax year as well? Sorry if I am reading this wrong!

Correct, and maybe consider adding to [top-up] the new 1 year fix you are going to transfer into if you've found one with a decent rate rather than open another ISA