Icesave compensation - ISA tax-free status lost?

mahar

A new angle on the Icesave question:

If you have an ISA with Icesave (with less than £50k in it), then you get your money back through claiming if it goes bust - but would the money in the ISA lose its tax-free status? (i.e. is it just tough luck...?)

Anyone know?

steadysaver

I have been trying to find the answer to this question also... I would hope that the government would see sense and allow you to re-open and deposit into another ISA...

Remember they have potential 150,000 votes to lose over how they handle the UK end of any potential fall out

Stormy

Same here, this is my biggest worry now!

Reaper

As far as I know there is no official policy on this.

I see no reason why the compensation can't be paid in the form of a new ISA set up with another bank, but we will have to wait and see what they do if it comes to it.

danthemoneysavingman

I would hope so too, but I dont see the tax-grabbing government turning down an opportunity to take more of our money for furnishing their second homes... again...

LGG_2

dito. i have an ISA with them aswell. also i was due to get my intrest at the end of the week. do u think i still will or is that a silly question

DigitalJedi

I don't think anyone in govt has ever thought about this question. I mean when ISA's were created a bank going out of business was unheard of.

Right now though I'm more concerned with getting my money out or feeling secure that my money is safe rather than worrying about whether my interest is tax free or not. Right now I'd happy trade the tax free status of my savings for the security of knowing I'm not going to lose the lot.

jrawle

Here's another related question.

I opened my Icesave ISA in 2007/08. In the 2008/09 tax year so far, I have deposited just £500. Even if I'm resigned to losing the tax-free status of the money in my ISA, will I be able to use the remaining £3100 of this year's allowance with a different ISA provider?

danthemoneysavingman

I'm not sure why people keep saying they think they'll lose their money when it's under £50K. The FSCS states they wont. The government say that too. Kaupthing Edge is still 'alive' so Iceland hasn't vanished beneath the waves (just yet). I had no intention of touching my money in the near future so am believing my money is safe enough. Icesave has gone into RECEIVERSHIP, not LIQUIDATION, so the FSCS doiesn't come into play... yet. It's all this speculation on very little fact that's getting us further into the mire anyway. So unless ppl are planning to stuff their mattresses (surely less safe than banks??!)... ugh.

danthemoneysavingman

The landsbanki site states the following:
"Landsbanki would like to stress that the bank has not been put into liquidation but is in receivership which gives it a temporary protection from payment of debts and obligations as they fall due. Work has already begun on the restructuring of the operations of Landsbanki. The receivership committee and Landsbanki's CEOs share the view that operations over the next days will be performed in a manner as close to business as usual with a view to protecting Landsbanki's assets in Iceland and abroad."

jrawle

danthemoneysavingman wrote: »

I'm not sure why people keep saying they think they'll lose their money when it's under £50K. The FSCS states they wont.

Just to clarify: this thread is about Icesave, and the first £16,000 - which will be more than most people's deposits, so effectively 100% of their money - is covered by the Icelandic scheme, not the FSCS.

Like you, I'm fairly optimistic that I'll get my deposit back along with the last year's interest (if, indeed, I need to claim anything at all.) However, if I lose that tax-free status, I'll have lost £6600 of tax free allowance forever - that could mean the UK government taking up to £100 of my money as extra tax each year, for as long as I still have the savings. That's what this thread is about.