Fixed rate cash Isa coming to an end

[Tribollite]

I just want to check I'm not doing something silly.

I've got a 5 year fixed rate cash ISA coming to an end in April. I started with10k and earned £1,250 interest in that time so it's now £11,250.

I can't be bothered with doing a transfer form to put it in my stocks and shares ISA with another company. There is no harm in just closing the ISA, putting cash in current account, then deciding what do with it later (pension or stocks ISA)?

It says I lose the tax-free status if I withdraw it but I'm pretty sure that doesn't mean I have to pay tax on the £1250, but wanted to check here in case I'm misunderstanding something.

It doesn't matter if the £11,250 uses up some of my £20k stocks ISA allowance for 2023/24 if I eventually choose to put it all in there, I wouldn't have put more than about £3k in there anyway next year.

It does not mean you have to pay tax on the money earned. You will pay tax on future interest if you do not reinvest in the capital in an ISa. I would transfer it to an instant cash ISA. This way you keep the ISA wrapper until you decide what to do. Instant ISA are paying up to 3% at the moment.

What are the maturity options? What will the current ISA provider do with it if you don't instruct them to close the account.... move it to an instant access ISA at minimal interest rate? Can you just leave it there till you know what you want to do with it? That's even less effort.

There are some 18 month cash ISAs paying 4.2% at the moment. Virgin and Santander. Unless you need the cash put it into one of those.

Thanks for the replies.

If I do nothing it goes to an instant cash ISA with minimal rate. But if this happens doesn't that count as a new ISA and I'm committed to it for the year as you can only open one a year?

If you let it roll over to the default ISA it doesn't affect your ISA allowance at all. It would only be if withdrew the funds into a non ISA and then wanted to put it back into an ISA at a later date that it would form part of your ISA allowance.

Ah ok great, thank you all, I think I'm clear now and know what to do.

Also meant to say sorry, you can open as many cash ISAs as you like in one tax year, but you can only put new ISA funds into one ISA in the same tax year. So if you are just rolling over existing ISA funds and not adding new funds from a Non-ISA account you will still have your £20,000 ISA allowance for the upcoming tax year.