Icesave ISA - Can I withdraw and start new one?

steve_hill

I have an ISA with one of the Icelandic banks and would like to withdraw the money from there, especially after the PM's comments tonight about how things have got considerably worse today for the future of the banks there. I know they have a guarantee system but it is heavily underfunded for a big run on either KE or Landbanski. I also assume that if the Icelandic govt fail to pay the first 20k Euros, the British system would not pick up that slack?

Anyway, does anyone know if I can take my ISA out of Icesave, have it in a cash deposit account and then open another ISA account in this same year and redeposit the money there? Or can I only maintain the ISA status by transferring it directly from Icesave to another ISA account? I have the maximum deposit in Icesave for the last two years at present.

Any useful info welcome....I know there has been much deriding of Iceland lemmings today but if the PM is saying things are on the verge of collapse then I'd rather go with him for his inside knowledge.

Steve

sexy_fufu

You can transfer out of it,

Natwest are doing a deal at the min, you can sign up online but you have to let them transfer all the money for you, you cant withdraw it yourself otherwise you will lose your tax free allowances.

donna xx

LucyTheDwarf

I cannot in a million years see the government let any saver lose out, at all. It'd be handing the country to David Cameron on a plate, if that happened.

But anyway, you need to transfer it, if you want to change ISA providers. Withdrawing the cash loses the tax free status. You will get a form from your new provider to complete. NatWest are doing a very good rate for transferred ISAs at the moment - 7.3% IIRC, though I do not know how long this rate lasts, or what limitations there may be.

ebyard

Steve

You can move your ISA anytime you like, to another provider. You are not locked in to any one company. As long as you don't have more than 1 ISA in any financial year or deposit more than £3600, you can do with it what you want - it's your money!

Just ask your new bank etc for a transfer-in form and they will sort it out for you. Make sure you pick an account with a good rate (NatWest at the moment!).

Ed

napoleon

You'll can't open another cash ISA this year as you've already done one this year and you'll lose all tax advantages

Don't be a lemming, leave it there

steve_hill

Brilliant, thanks everyone for clearing that up for me so quickly. I just hope Icesave survive long enough for me to transfer it out!

Really appreciate the help.

Steve

nicholbb

You'll need to find out how long it would take to transfer, seen people saying it takes from 1 month up to 3 months. In one month you'll know there wasn't a problem.

sexy_fufu

http://forums.moneysavingexpert.com/showthread.html?t=1202709 see this

steve_hill

Yeah, might already be too late to beat the bite if it is going to happen. I was very willing to ride things out with Icesave, even with the krona falling so heavily today. The Icelandic PM's comments tonight though have really set off the alarm bells...

From the Guardian report...

Haarde, who had spent the weekend in intensive talks, made it clear how urgent the need for action now was. "As recently as last night, it looked like the banks could continue operations for a while," he said. "This morning and today, things have totally changed for the worse."

I think it might be a simple choice of running the gauntlet of hoping that either Icesave survive or the Icelandic government guarantee holds up under the pressure if it doesn't or foregoing the ISA status and the interest/tax free portion to keep the capital intact. A real dilemma that I imagine many people are having.

Totally appreciate all the advice, all very helpful and enlightening.

Steve

Mikeyorks

This is not a recommendation ... and I certainly wouldn't do it for the reasons outlined in your OP ... but you can (partially at least) 'self transfer' your own ISA. This despite the following guidance from HMRC is a bit confusing as it starts out categorically stating you can't 'self transfer' - then describes the acceptable exception :

Investor error - Self transfer
12.30 ISA investors must transfer their ISAs through the ISA manager. Investors cannot transfer an ISA by closing it and opening a new ISA with the new ISA manager (commonly known as ‘self transfer’).
12.31 Blank
12.32 However, where
• the investor subscribes to two cash ISAs, in the same tax year, and
• subscriptions to the first ISA subscribed to were valid, and
• the first ISA subscribed to was closed (see paragraph 12.33) before
subscriptions to the second ISA were made the subscriptions to the second ISA may be valid (see paragraph 12.32a).
12.32a The first cash ISA to be self-transferred in tax year is valid, and need not be
repaired. The second (and any subsequent) self-transferred cash ISA is not valid and is not eligible for repair.
12.33 An cash ISA is closed for this purpose when all the funds held in the ISA are
withdrawn (including any subscriptions for earlier years) and no further
subscriptions are made to the ISA in the same tax year.
For Example
Mrs Cooper subscribes £3,000 to a cash ISA with Anybank plc on 20 April 2008.
She closes it on 30 November 2008, then subscribes to a second cash ISA with
Betterhomes Building Society on 3 December 2008. The subscriptions to the
second cash ISA are valid.

.... you would need to close the ISA in entirety and withdraw the funds for both years (12.33). Then open a fresh one elsewhere and deposit £3600 only representing the 08-09 cash allowance. And no ..... you couldn't put the previous year £3k anywhere else in 08-09. The penalty is you lose the ISA protection of the previous year.

Apologies it's all gone 'bold' - mystery of cut / paste as it's OK in preview mode!

nicholbb

nilrem wrote: »

That is what I was thinking TBH.

yep we posted at the same time, great minds :rotfl: