We’re in the middle of what we, on the Which? Money Helpline, call ‘Isa season’. We receive hundreds of calls at this time of the year from those trying to find the best Isa deal. Are you feeling the Isa buzz?
Understandably, most people aren’t financial enthusiasts and probably don’t think about Isas more than once a year, if that.
So it’s perhaps not surprising that lots of calls we receive via the Money Helpline relate to the rules around transferring Isas. But as the trusty Isa has been part of the financial landscape for well over a decade now, it shouldn’t be too much to expect banks and building societies to be on top of the rules and therefore provide clear advice.
‘Illegal’ to have multiple Isas?
Unfortunately we get a steady stream of calls from people who’ve been told the wrong thing by their bank. One caller was told by an adviser at his bank that it was ‘illegal’ for him to have more than one Isa. This advice had scared him as he had more than one Isa – and is of course completely wrong.
While it is true that you can’t pay into more than one Isa at a time, you can have more than one ‘inactive’ Isa – for example, you might have one that you paid into last year and another that you’ve paid into this year, not to mention that you can have a cash and a stocks and shares Isa in the same tax year.
We also regularly hear stories about banks who mess up Isa transfers. We work with individuals to get them the compensation they are owed, but in an ideal world, the mistakes shouldn’t be made in the first place.
Do you think banks and building societies make it easy to transfer Isas from one account to the next?
Let your Isa provider do the leg work
If you’ve got money to save and you haven’t got an Isa already, an Isa is a good place to start as you don’t pay tax on the interest. If you already have an Isa but it’s on a rubbish rate, then it makes perfect sense to switch to a better one.
If you want to make sure it all goes smoothly, your best bet is to understand the steps so you can be aware if your bank gets it wrong. The most important thing to remember is not to withdraw your money and take it to your new provider. If you do this, it will lose its tax-free status. Instead, just tell your new provider you want to transfer and they’ll do the work for you.
Have you made the switch for the new Isa season or do you think the current rates provide little incentive to make the move?