Is it possible to transfer cash from an old Isa into a new one with a higher interest rate? What are the rules?

I have an emergency savings account in an easily accessible old Isa with a low interest rate.

I’m sure I can do better if I move it, so what are the best Isa easily accessible options to “transfer” at the moment?

Would I have to top up the background for it to be accepted by a new Isa provider, or can I just move it?

Tax Free Wrap – Every tax year you can save or invest up to £20,000 inside an Isa

Ed Magnus of This is Money responds: It’s great to have an emergency savings fund in an easily accessible savings account, since you’ll be able to withdraw funds whenever you need them.

But it’s prudent to shop around for a better rate, as interest on savings has reached its highest levels in more than 10 years.

You can switch your Cash Isa account to a new provider, but you are correct in mentioning the ‘transfer’ item.

Under current rules, Isa cash providers must allow outward transfers, but there is no obligation to accept inward transfers. Therefore, not all Isa providers do this.

We look at the best interest rates you could get and explain the rules about transferring money from an old Isa to a new one.

– Check out the best Isa cash rates easily accessible in This is Money’s best buy tables

What are the best easy access Isa rates?

The average easy-access cash Isa currently pays is 1.26 percent, according to Moneyfacts.

If you are currently earning interest around this level or even less, you should definitely look at moving your money elsewhere.

There are currently a number of providers that pay more than 2.25 percent: one percentage point more than the average settlement. But you can do even better than this.

In terms of the best possible offer, those who bank with Virgin Money, Clydesdale Bank or Yorkshire Bank have access to a Virgin Money-exclusive Easy Access Cash Isa offer that pays 3 per cent.

If you want this market-leading rate, you’ll need to set up a free Virgin M Plus current account.

The Isa cash account allows you to make transfers from your current provider. If you want to transfer current year’s subscriptions, you must transfer the full amount.

Follow The Rules: If You Transfer From One Isa Provider To Another During A Fiscal Year, It Will Not Affect Your Annual Isa Allowance. Just Make Sure You Follow The Correct Transfer Process

Follow the rules: If you transfer from one Isa provider to another during a fiscal year, it will not affect your annual Isa allowance. Just make sure you follow the correct transfer process

As for the other main offers, there are three building societies: Nationwide, Principado and Scottish Building Society, which have offers that pay 2.5 per cent and allow transfers.

The Principality agreement includes bonus interest of 0.4 percentage points paid during the first 12 months.

Nationwide’s one-year triple access account comes with a caveat, as it only allows up to three withdrawals during a 12-month term.

For those who make more than three withdrawals, your rate will plummet to 0.75 percent for the remainder of the term.

The Scottish Building Society’s 2.5 percent offer has no such restrictions and can be opened with a minimum deposit of £100.

It’s worth noting that all of these providers are FSCS-backed, meaning your cash will be protected up to £85,000 under the deposit guarantee scheme.

What are the rules when saving cash Isa?

It is worth keeping in mind that you can only have one active Isa cash each year.

This means you can’t open multiple Cash Isas in a single tax year and benefit from the tax-free savings allowance on each one.

It also means that if your existing Isa cash was opened in the current tax year, you will need to transfer all of it to the new provider and close the old account.

However, if you are rolling over Isa funds made during a prior tax year, you can roll over as much as you like without affecting your current annual Isa allotment.

Regarding the question about how to top up the fund, you don’t need to do this to be accepted by the new provider.

One important thing to avoid is withdrawing your money from an Isa. If you do this, your money will lose its tax-free status, so make sure you follow the correct transfer process.

The best way to transfer is to contact the new provider and complete an Isa transfer form.

Who is a cash Isa suitable for?

The fact that your easily accessible savings are in an Isa account will mean that any interest you earn will be tax free.

That said, it’s worth remembering that if you’re a basic rate taxpayer you can earn up to £1,000 in interest each year without having to pay tax. If you’re a higher interest rate taxpayer, you can still get up to £500 of tax-free interest every year.

However, if you’re an extra rate taxpayer making £150,000 or more (dropping to £125,000 or more from next April) you don’t get a personal savings allowance, so a cash Isa will definitely make sense in those circumstances.

The best easily accessible non-Isa savings offer is with Al Rayan Bank and pays 2.81 percent. Someone with £10,000 in this account would earn £284 in interest over the course of a year.

If you’re a base rate or higher rate taxpayer, that means you wouldn’t need to pay taxes on that interest in any given year, unless, of course, you had money earning interest elsewhere that put you over the limits. respective.

That said, there’s little difference between the best non-Isa easy access deals and the best Isa cash easy deals today.

By withdrawing funds from your Cash Isa, you would lose the tax-free wrapper in the future, which may be a decision you may ultimately regret if interest rates rise.

Expert View: Transfer an Isa

Derek Sprawling, Director of Savings at Paragon Bank responds: Transferring an Isa can be done in a few easy steps, and you don’t need to top up your fund to do so.

First, you need to open an Isa account with a new provider. Second, tell your new provider that you want to transfer an existing Isa.

Lastly, if your old provider does not have electronic transfer capabilities, you will need to complete a transfer form and submit it to your new provider.

Your new provider can then complete the transfer electronically or by mail. This should not take more than 15 days for Isas in cash and 30 days for Isas in shares and shares.

When Isas are transferred, they go with a transfer history form detailing how much of the money is from the current year’s subscription and how much is from prior years.

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