Cash confusion

By THIS IS MONEY
Updated:

 

I bought a maxi stocks and shares Isa into which I am paying £125 a month, a total of £1,500 for the year, to repay my mortgage. I also want to £3,000 into a mini cash Isa before the end of the tax year. I now realise that I should have taken out a mini stocks and shares Isa but I did not understand the implications of what I was doing. Now it looks as if I will lose out on the cash Isa for this year. My Isa provider tells me I can't swap from a maxi to a mini. Is this right? P.T., London

Justin Modray from independent financial adviser Chase de Vere says: Unfortunately your Isa provider is right. The Inland Revenue does not allow you to switch between mini and maxi Isas. This is a rule which many investors may have fallen foul of, but there is little you can do to remedy the situation.

One option, although not ideal, is to transfer your maxi Isa to an Isa manager that offers a cash component within its maxi Isa. But you will incur charges.

The good news is that next tax year you can avoid the same problem by switching your mortgage contribution into a mini stocks and shares Isa, freeing up your mini cash Isa allowance. But next tax year the maximum you can deposit in a mini cash Isa falls from £3,000 to £1,000

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