IceSave ISA Tax Free Status Question

PsychoPrincess

Hello

I am sorry if this question has already been put forward, but I couldn't see it anywhere.

Like many other people who use this site I have money in IceSave. Some is in an ISA, some in a fixed bond and some is in the savings account.

I am not too worried overall, because the total of all 3 accounts is approximately £17,000 so I should definitely get all my money back eventually, one way or another.

My question is (got there at last!):
About £8,000 of the money I have in IceSave is in an ISA. From what I understand, if you just withdraw money from an ISA it cannot regain it's tax free status, and you effectively lose, not the money, but the ability of that money to keep earning interest tax free. So, ordinarily, if you want to keep ISA money as ISA money you have to move it as an ISA transfer between ISA providers.

So, when I get the money back through the compensation schemes, will I be able to put that £8K into an ISA, or has it's tax free status been lost?

Does that make sense? I know what I mean, but probably haven't explained it very well! I realise that at this point no one may actually know the answer.

That was all - thanks for reading this far

TMBH

This is exactly what I want to know!

I have about £6300 in an Icesave ISA. So like you (above) although I am confident I will able to get me money back am I going to loose my ISA allowance?

greyster

I emailed the FSCS this question at about 3PM this afternoon. When I get a response I will post it here.

steve_hill

I posed the same question yesterday before trying unsuccessfully to get my ISA out of Icesave on a CHAPS transfer. Mikeyorks had the best info, from HMRC, stating that if you take your money out in cash and then close that ISA, you can reinvest this years limit - ie £3600 - back into another ISA with another provider and maintain the ISA status. It is called 'self-transfer'. You cannot reinvest previous years though and still maintain ISA status for that money.

So, if we happen to get our money back in cash that is the worst case scenario. With previous UK bank bailouts this year, the government have, apparently, allowed the ISA savings from those accounts to be transferred to another provided without losing their ISA status. In this case, that will depend if the UK government does the right thing or not.

One thing is for certain in all this, that if we stay quiet and accept possibly losing our money it is far more likely to happen. The government respond, as always, to pressure from the people who vote them into power. Voice your opinion in forums, the media, wherever you can. Urge Martin to continue his good work in being a public voice for us. This is a serious UK situation with hundreds of thousands of people potentially going to lose large sums of money (large for those who lose it at least). The government will act if they feel they can't get away with not acting.

TMBH

steve_hill wrote: »

One thing is for certain in all this, that if we stay quiet and accept possibly losing our money it is far more likely to happen. The government respond, as always, to pressure from the people who vote them into power. Voice your opinion in forums, the media, wherever you can. Urge Martin to continue his good work in being a public voice for us. This is a serious UK situation with hundreds of thousands of people potentially going to lose large sums of money (large for those who lose it at least). The government will act if they feel they can't get away with not acting.

But isn't this what happened with Northern Rock. People panicked to take out their money and as a result the bank got into serious trouble!

This is my other big fear is that people will rush to take out their money snowballing the problem and turning a bad situation into something catastrophic!