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Last Updated: Friday, 6 February 2004, 08:11 GMT
Ask the expert: Switching Isas
Piggy bank

I have two mini-cash Individual Saving Accounts (Isas) with two different providers from previous years, chosen because at the time they showed good interest rates. They have now been overtaken by others.

Can I move these to other providers without losing their tax- free status, the interest they have earned, and can I still invest in another?
Jessie Murray

Colin Jackson, managing director of independent financial advisers Baronworth:

Subject to any restrictions imposed by your existing product providers, you should be able to transfer your mini-cash Isas to other providers with the minimum of fuss.

Generally speaking, all you need to do is approach the new provider, complete the documentation and let them get on with dealing with the transfer.

Who you transfer to is, of course, a different matter.

You will have to research the market to see who is offering the best rates coupled with terms that are acceptable to you. There is a wide range of products available.

Do you have a question?

If you go for a variable rate mini-cash Isa you should bear in mind that some product providers have been know to offer a very attractive rate to tempt new customers but then reduce the return at a later date.

One way to get round this possible problem is to go for a fixed rate mini-cash Isa.

Each person is allowed to invest into one mini-cash Isa in each tax year. If you have not taken one out for this tax year and wish to do so you should act quickly as you will have to do so before the end of the tax year (5 April 2004).

Bear in mind the provider will need some time to process the paperwork. Also, take into account the possibility of human error.

You could make a mistake when filling in the application form which means that it could be returned to you for amendment.

Always give enough time before the end of the tax year to cover these contingencies. If you leave it to the last minute you may be too late.

Whilst I would encourage anybody to take advantage of any tax concessions, in reality, the amount of tax that you will save is small.

This is due to the relatively small amount that you can invest into a mini-cash Isa coupled with, currently, low rates of interest.

Unless you need the cash, on no account should you cash in your Isas as you will lose the tax break forever. If you make a transfer, the tax-free status will continue.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.



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