Cash ISA Discussion/Question

deefadog

Hi, I have just read through this entire article and i think i understand the ISA concept now, but need clarification.

Each tax year i can open a cash ISA and put a maximum of £3000 into it

So questions -

1) Can i apply before the new tax year to get the full year of interest?

2) If above is yes, what is the best time to do this? a month in advance (March 5th)

3) Can i open a cash ISA after the tax year (5th April)? I would like to open one soon but it's May!

4) If i open an ISA with an opening balance of £100 can i add to it in odd amounts to make up the full £3000 maximum? or does it have to be equal amounts monthly?

5) If i open one up now (fictious) with for instance the Halifax, and then next tax year, can i just keep adding to it with a new allowance to put in of £3000 and so on, so in 4 years time i will have £12000 plus the interest i have earned. or do i have to open seperate ISA's and have say 3 full ISA's just earning interest on what in it

5b) is there a maximum total you can have?

6) Does the interest earned affect my allowance, i.e if i get £100 interest in the first year from a full ISA and have a balance of £3100, will i only be allowed to add £2900 to it on the next tax year?


I know alot of these question have been asked and answered but some had a few conflics and got confused.

Thanks for any help on this matter

isasmurf

deefadog wrote:

1) Can i apply before the new tax year to get the full year of interest?

I doubt very much that any bank or building society would let you do this, but technically the rules do allow you to apply for an account for the following year as long as you don't put any money into it before the tax year starts. It's best to apply with your cheque in hand on the 6th April if you want a full years interest.

3) Can i open a cash ISA after the tax year (5th April)? I would like to open one soon but it's May!

You cannot open an ISA for a previous year after the tax year has ended - if that's what your asking. Once the tax year is over - your allowance has gone forever.

4) If i open an ISA with an opening balance of £100 can i add to it in odd amounts to make up the full £3000 maximum? or does it have to be equal amounts monthly?

Depends on the ISA. An Instant access ISA will allow you to depost money whenever you like and any amount you like. They are just normal savings accounts with tax advantages.

5) If i open one up now (fictious) with for instance the Halifax, and then next tax year, can i just keep adding to it with a new allowance to put in of £3000 and so on, so in 4 years time i will have £12000 plus the interest i have earned. or do i have to open seperate ISA's and have say 3 full ISA's just earning interest on what in it

You can add to the same ISA each year.

5b) is there a maximum total you can have?

Not under the current rules which are guaranteed until April 2010.

6) Does the interest earned affect my allowance, i.e if i get £100 interest in the first year from a full ISA and have a balance of £3100, will i only be allowed to add £2900 to it on the next tax year?

No. The allowance is money deposited by you into the account, interest does not count towards your allowance.

I know alot of these question have been asked and answered but some had a few conflics and got confused.

I hope I've been able to defuse your confusion.

deefadog

Thank you so much!

One question i think i confused you with is - Can i open a cash ISA now for this tax year 05 april 2005 - 05 april 2006 and start stashing the cash away now?

So basically an Instant access ISA is just a good savings account with tax benefits where you can only save £3000 pounds a year into it. I think i got it

Smamfar

Sorry if I am covering old ground with this question!!

After comparing ISA's I am tempted by the Yorkshire building society one. After reading the article it says not to close old ISA's but to transfer them, I have very little in my only old ISA and the Yorkshire one appears not to allow transfer of old ISA's into it. Am I best to select a different ISa or just open the new one and later transfer the money from my old one into it?


Thanks for the help

Milarky

Smamfar wrote:

Sorry if I am covering old ground with this question!!

After comparing ISA's I am tempted by the Yorkshire building society one. After reading the article it says not to close old ISA's but to transfer them, I have very little in my only old ISA and the Yorkshire one appears not to allow transfer of old ISA's into it. Am I best to select a different ISa or just open the new one and later transfer the money from my old one into it?

Thanks for the help

Hi Smamfar,
I have looked at the Yourshire - and it seems to be paying 4.90% plus 0.35% bonus for the first two years.

For someone in your situation you might as well withdraw your old ISA [as there isn't much in it - and use the proceeds as 'new' ISA subscription money.

Regular saver-type ISAs have become popular of late. One, from the Portman was offering 7.5% - but with the catch of a £30 'transfer-out' fee. These are the fees you have to watch out for. Strangely, the Portman does not seem to be offering this ISA anymore.

Look at the Scarborough 'Easy Saver' with ISA option:
http://forums.moneysavingexpert.com/showthread.html?t=56144
This is the sort of account which might suit you best, as you don't have 'up front' money and just wish to save. What I think might be good about this account is that it is offered at the same rate as their own regular saver account. Since regular saver accounts tend to have the highest rates offered by any type of account this suggests that this rate [currently 6%] will not become a 'shrink account' [offered with a high rate initially to attract in customers but then cut back more quickly than the rates on other accounts] if interests start to fall - because Scarborough will tend to pitch their regular saver rate some way above all their other rates.

Anyway, the main point is that having so little to play with you actually have more options by starting an ISA 'afresh'.

[can anyone offer a different approach to this? There is First Direct too, paying 6.25% until 6th October, but then it becomes fairly uncompetitive again]

good luck

Chadsman

If and only if you will be putting less than £3k into the ISA in total in this tax year (ie: up to and including 5th April 2006) then there is nothing lost in closing the existing ISA and putting those funds in the new ISA.

BUT if you intend using your whole allowance of £3k in this tax year by closing the existing ISA you lose the tax benefit on that amount. In which case if the rate on this ISA can be bettered elsewhere by all means transfer it ...but remember to do this by contacting your new provider and check what the transfer penalties are (if any).
Personally I would not let the fact that YBS dont accept ISA transfers stop me from putting this years subscription their way and transferring the existing ISA elsewhere.

krishna

I don't seem to have noticed any discussion of this ISA and yet it seems to offer the best rates. You can transfer in or deposit new cash. Withdrawals supposedly are subject to 30 days notice, but you can make one instant, penalty free withdrawal a year and that can include a transfer out.

This seems to beat the Yorkshire BS e-ISA by 0.1%. Account needs to be operated through a Branches (limited to East Yorkshire) or by post.

Any reason not to go for this?

Krishna

Aark

Halifax’s* Direct ISA saver has a lower interest rate, 5.15%, but none of this is a bonus.

The Halifax's site is showing this account as having an interest rate of 5.00% from today.

FL

First Direct apparently will not let people on their old ISA product (which is fixed at 6.25%) which is due to see an interest rate decrease on the 6/10/05 transfer into the new ISA that they are currently promoting. Seems a bit unfair. I think I shall be transferring out as soon after that date as possible.

hansi

Do Halifax accept transfers in from other ISA providers and do they charge for this?