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    • the learner
    • By the learner 19th Mar 17, 9:09 AM
    • 160Posts
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    the learner
    Last minute suggestions
    • #1
    • 19th Mar 17, 9:09 AM
    Last minute suggestions 19th Mar 17 at 9:09 AM
    Hi, I need to make a decision with my ISA before tge April deadline since I haven't used my allowance this year.
    I currently have two ISA opened in previous years:

    1) 15k in a S&S ISA with Fidelity
    2) 15k in a cash ISA with HSBC that used to pay a bit more than 1% but with a monthly £10 bonus

    Now the HSBC bonus is over and I would like to transfer this ISA to get better opportunities.

    My initial idea is to increase my S&S ISA with Fidelity to 30k but I also plan to buy a home in the next year or so.

    Given this, and given the approaching deadline, what would be the best strategy to get the best opportunity for this year allowance?

    So far I was thinking:

    - I open a help 2 buy ISA and the remaining part goes into a new cash ISA with good rate. Maybe using Nationwide would help since I guess I will use them for the mortgage?
    - move existing HSBC ISA to Fidelity after April, which should not affect my ISA status on that amount of money

    Do you see any better strategy to maximize the opportunities given the short deadline? Thank you.
Page 1
    • bowlhead99
    • By bowlhead99 19th Mar 17, 10:05 AM
    • 6,998 Posts
    • 12,603 Thanks
    bowlhead99
    • #2
    • 19th Mar 17, 10:05 AM
    • #2
    • 19th Mar 17, 10:05 AM
    - I open a help 2 buy ISA and the remaining part goes into a new cash ISA with good rate. Maybe using Nationwide would help since I guess I will use them for the mortgage?
    - move existing HSBC ISA to Fidelity after April, which should not affect my ISA status on that amount of money
    Originally posted by the learner
    So just to clarify, there is £15k in Fidelity investments, £15k in HSBC cash ISA and a further £15k elsewhere that could be used to max out the 2016/17 ISA allowance? £45k total. So the two options you list above can both happen and you plan to do both, rather than choosing one between the other?

    So far I was thinking:

    - I open a help 2 buy ISA
    Definitely do this. £1000 opening the ISA and £200 this month and £200 next month gets you £1400 in the ISA before the tax year is out. That offers a 25% bonus on top of the interest rate you earn and on top of the bonus you could earn for your 2017/18 deposits into the product.

    The 25% bonus on £1400 is £280, which is almost 2% on the whole £15k you are going to put away, ignoring the actual returns you get in interest (or investment returns). If you're going to buy a qualifying property it is a no brainer to grab that extra bonus rather than miss it, so make sure you do this.

    and the remaining part goes into a new cash ISA with good rate
    As a HTB ISA is a type of cash ISA and you are only allowed one cash ISA containing current year money, the only way to do that is to select an ISA manager who is willing and able to split the cash ISA allowance across multiple products and report it all as one big ISA to HMRC. Nationwide are one such firm that allows 'split ISA' treatment and so you could do £1400 into their HTB and £13840 into their Flexclusive instant access ISA at 0.75%.

    If you did Nationwide for the HTB you would not be able to do anyone else's cash ISA. You could put both the HTB and the 'ordinary' cash ISA with someone else but only if they support the 'split ISA' concept.

    However, you'll find cash ISA interest rates (aside from HTB because it only takes very limited balances) are pretty low everywhere. If you are looking at only 0.75% inside an ISA and you are going to be taking the money out of the ISA wrapper anyway in a year or so to buy your house, your priority should not necessarily be using an ISA to avoid tax on the interest over the long long term, but finding the best net-of-tax interest rate you can in the shorter term.

    For example if you are not a Nationwide customer and not already maxing out the Nationwide Flexclusive Regular Saver at £500pm for 5% on every penny deposited, do that. If you are not already using high rate current accounts at two or three or five percent and other regular savers at three or five percent, do those in preference to 0.75% in an ISA.

    Maybe using Nationwide would help since I guess I will use them for the mortgage?
    When you apply for the mortgage and are about to complete on your property, your solicitor will take your HTB closure account details from you and make a claim on the government for your bonus. Whether or not the HTB account was with Nationwide who happen to be your mortgage lender does not make a difference to getting the bonus, or the mortgage.

    As an aside (not that it makes a difference to the above comments), it's probably too soon to guess that you will use Nationwide for the mortgage. I use them and they are fine. But you don't know what their rates and deals will be a year from now or what their competitor's rates and deals will be either ; a year out is way too far to conclude on who will have the best deal for you. Meanwhile of course there is no harm in using them for their other decent products.

    - move existing HSBC ISA to Fidelity after April, which should not affect my ISA status on that amount of money
    Moving an existing ISA to another new or existing ISA does not affect ISA status, that's right.

    However, at that point you will have two thirds of your deposit in S&S ISAs and one third in cash (cash ISAs or other higher interest cash accounts). S&S ISAs have investment risk. There are not really any 'slow and steady' investment options which could get a return meaningfully higher than cash and could not also fall 20% over the course of a year. A mix of 50/50 shares and bonds could fall quite a lot further than that and it's not beyond the bounds of possibility for a 100% equities fund to lose half its value over a year.

    So, if you plan to top up the Fidelity ISA to £30k from £15k, obviously you need to be comfortable with that £30k of funds only being worth £24k or £20k or less in a year's time and potentially needing to delay the purchase to allow for a number of months of savings to get back up to £30k (if you need the whole £30k towards the property).
    Last edited by bowlhead99; 19-03-2017 at 10:09 AM.
    • the learner
    • By the learner 19th Mar 17, 11:58 AM
    • 160 Posts
    • 8 Thanks
    the learner
    • #3
    • 19th Mar 17, 11:58 AM
    • #3
    • 19th Mar 17, 11:58 AM
    Thanks a lot for your reply.
    So by end of this tax year (April 2017) I have to decide how to allocate my £15,240 allowance.
    Once this allowance has been used I will have about 45k in ISAs.
    I am not happy about current HSBC rate so I was thinking of moving that cash ISA somewhere else.
    So I will definitely open the help to buy ISA by putting 1200 this month and 200 first day of April.
    Given the limitation opening a new cash ISA with the remaining part of this year allowance, how about the following:

    - I put 1400 in a help to buy
    - I put the remaining 13840 in Fidelity S&S ISA (where I already have 15k)
    - I move existing 15,240 HSBC cash ISA to a different provider offering the best cash rate
    • masonic
    • By masonic 19th Mar 17, 1:20 PM
    • 9,124 Posts
    • 6,274 Thanks
    masonic
    • #4
    • 19th Mar 17, 1:20 PM
    • #4
    • 19th Mar 17, 1:20 PM
    - I move existing 15,240 HSBC cash ISA to a different provider offering the best cash rate
    Originally posted by the learner
    Why don't you just move it to any provide who allows flexible withdrawals. Then you can withdraw the money on 6th April and put it into high interest current accounts.
    • the learner
    • By the learner 19th Mar 17, 7:32 PM
    • 160 Posts
    • 8 Thanks
    the learner
    • #5
    • 19th Mar 17, 7:32 PM
    • #5
    • 19th Mar 17, 7:32 PM
    Would IFISA be a good alternative to diversify a bit?
    Can I combine that with help to buy, i.e. I fill the help to buy ISA and put the rest at work in a IFISA?
    Last edited by the learner; 19-03-2017 at 7:34 PM.
    • masonic
    • By masonic 19th Mar 17, 7:42 PM
    • 9,124 Posts
    • 6,274 Thanks
    masonic
    • #6
    • 19th Mar 17, 7:42 PM
    • #6
    • 19th Mar 17, 7:42 PM
    Would IFISA be a good alternative to diversify a bit?
    Can I combine that with help to buy, i.e. I fill the help to buy ISA and put the rest at work in a IFISA?
    Originally posted by the learner
    Yes, if you can find a decent P2P firm offering the IF ISA. At the moment no significant player is offering one. Hopefully that will soon change. In any case, it is a separate ISA type, so you can use it alongside the HTB ISA.
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