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Fixed rate isa matures in tax year 11/12 how will i be able to add in tax year 11/12 if it is a closed issue or product?

by Nikki09 14 March 2010 |

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If i decide to take out a fixed rate isa for the new tax year (10/11) and i put my allowance in, it doesn't mature till tax year 11/12 can i put in my allowance for the tax year 11/12 when it is a fixed rate isa and is a closed issue?
and can i make the additional £1500 (50+ yrs) for this tax year when the isa i have is a fixed rate isa for this tax year?

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MikeGG1 posted
Nikki
Let's start with this year. You can take out another Fixed Rate ISA this year, provided that it is with the same Provider. Many of them have special top-up facilities for this year only because of the change mid-year, or you can take out a new contract. Check with them.
Your other query seems to be in respect of what happens when a Fixed-Rate ISA matures and you also want to contribute your allowance for that year. The situation is that the one provider rule only applies to the current year's contribution. Any maturing ISAs from previous years contributions can be re-invested wherever you like in addition.
However, please remember that you must get the new provider to do the transfer direct. It mustn't go through your account or it will count as a disinvestment and a new contribution, which would count against your annual allowance.
Please also bear in mind that the Fixed-Rate ISAs can be for up to 5 years and the rates are higher for longer terms. Also, the larger the sum, the higher the rate. It is, therefore, worth consolidating ISAs as they mature. So, bear in mind the consolidation when deciding the timing of a new year's contribution.
If you have an ISA maturing in 2010/11, for example, you could make your 2010/11 contribution (£5,100) at the same time as the old ISA matures in order to get a combined bond for the total amount at a higher interest rate.
Don't forget that you can also invest in a Stocks & Shares ISA.
Mike
Posted on 14 March 2010 | Love 0 loves Report
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Swarbs posted
When a fixed rate ISA matures, the funds still stay in the ISA: they are usually just placed in a standard ISA paying a low rate, buy are still assigned to the year in which you paid them in. So if this ISA matures in e.g. March 2012, it will change to a different product, but will still be counted as your 2009/10 contribution, and thus won't affect your 2011/12 allowance. It will be the same situation if you 2010/11 ISA matures in 2011/12 - it will still be counted as your 2010/11 allowance and will just switch to a different type of ISA product.
As the original product you invested in will be closed, you will have to choose a new product for 2011/12, but as Mike says you can usually transfer your old allowances into this product as well, making sure all your money keeps earning the maximum possible interest. In general, you should transfer old ISAs into new products on a regular basis anyway, as when the fixed rate or bonus deals end you will tend to be put on a very low interest rate.
Posted on 15 March 2010 | Love 0 loves Report

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