NatWest mysterious letter - Cash ISA

houmie

Hello,

I received last week a mysterious letter from NatWest saying I had only invested about £300 in the current tax year and I had about £3300 left to invest until 5 April 2009 to invest.

The truth is I have started with the whole ISA savings in July/August 2005. For sure not sooner, because I didn't even have a job.

In other words I should have an allowance of
2005/2006 = £3000
2006/2007 = £3000
2007/2008 = £3000
2008/2009 = £3600
Total = £12600 correct?

I had transfered back in beginning November 2008 about £13500 from my former provider to my NatWest Cash ISA account. Therefore it is impossible having any allowance left, or am I missing here something?

I have been already to NatWest branch and also on the customer service phone. Unfortunately they can't help me or explain me the numbers either. They say its a machine created letter and many of them has been sent out. (haha what a reasoning) They can't even see the interest rate being paid to me right now on my account. Its such a bad service. They don't even know their product.

What is your take on this? If I am correct with my calculations and shouldn't have any more allowance for this current tax year, what will happen to the money and interest rate once transfered into my Cash ISA?

When I opened my Cash ISA with them they said I had also to open a basic current account with them in case of tax allowance mismatch so that they transfer back into the basic account if I transfered too much by mistake into the ISA account. So I can assume if this is a machine mistake, I would get my money back eventually, but what will happen to the interest rate earned in these period?

UPDATE: By the way the little print says on the letter something even more confusing:
**you will not be able to subscribe to another cash ISA in the next tax year 09/10 if you continue to subscribe your NatWest Cash ISA in the next tax yea. The tax year runs from 6 April to 5 April. The maximum you can subscribe to a Cash ISA is £3600 and you must not subscribe more than £7200 in total to ISAs in any tax year.

Any comments?
Thanks

rb10

You misunderstand the way the ISA works.

You get an allowance, which up until 2007/08 was £3000 per tax year, and from 2008/09 has been £3600. Each tax year, you can put up to this limit into one ISA. If you don't put any money into an ISA in any tax year, or only put in part of your allowance, then anything remaining is lost at the end of the tax year. Or, to put it another way, every adult in the country starts every tax year with a fresh limit, regardless of what they have done in previous years.

So, during the 2008/09 tax year, you can put in up to £3600 (as anything you've done previously is ignored). As you have put £300 in so far, you can put a further £3300 in before the start of April. Whether or not you do this, you will start in April with a fresh limit of £3600.

Transfers from one ISA to another don't count as part of your limit. You can transfer between ISA providers as often as you like, and there is no penalty for doing so, provided that you fill in an ISA Transfer Form from your new provider. They will then move the money and close the old account on your behalf.

houmie

Thanks for your answer. I am pretty sure I have used up my tax year 2008/2009 by paying £3600 into my former ISA provider. Considering the amount of £13500 - £12600 (all the possible ISA allowance since my start) = £900 which is pretty much the interest rate I would have earned in these years. i really think I shouldn't have any allowance left for 2008/2009 unless I am getting senile already.

ScarletBea

By the way, I got the same letter from Natwest and they must have looked at the information back in December, since I have used all my allowance via a transfer.... :rolleyes:
So you better confirm what you've really deposited, instead of trusting their numbers.

houmie

ScarletBea wrote: »

By the way, I got the same letter from Natwest and they must have looked at the information back in December, since I have used all my allowance via a transfer.... :rolleyes:
So you better confirm what you've really deposited, instead of trusting their numbers.

I see. but you cant really use up your allowance by only a ISA transfer in. Unless you meant transfer from current account into ISA, then yeah you have used it up.
The problem is though there is not much I could do, I was at branch and at the phone with the call centre. They know even less than I do. There is no way someone from natwest could help me. Its ridiculous. Maybe I just risk it. How would they know.

sly_dog_jonah

Natwest sent loads of these letters out with out-of-date information on. To find out how much allowance you really have left, check the account details section on Natwest internet banking.

When a current year ISA is transferred, the certificate sent with it states how much of the allowance you used up with deposits to the old provider. Anyone who had paid into an icesave ISA would have seen this on the transfer certificate we were sent in December after the FSCS compensation payout.

houmie

sly_dog_jonah wrote: »

Natwest sent loads of these letters out with out-of-date information on. To find out how much allowance you really have left, check the account details section on Natwest internet banking.

When a current year ISA is transferred, the certificate sent with it states how much of the allowance you used up with deposits to the old provider. Anyone who had paid into an icesave ISA would have seen this on the transfer certificate we were sent in December after the FSCS compensation payout.

Fantastic tip. I just checked and true it really says i could still invest £3300. Could be a machine mistake or could be my mistake after all. I just take this opportunity as a good omen. hehe

Thanks

sly_dog_jonah

Natwest might have not updated the allowance with any deductions necessary because of your previous deposits with your previous provider. Double check your old ISA statements before proceeding if you don't want Mr HMRC sending you a letter! If your last deposit in the old provider was prior to April 5th 2008 then you have not deposited anything for 2008/09 other than that you have added to the Natwest one (you can ignore any interest payments).

houmie

sly_dog_jonah wrote: »

Natwest might have not updated the allowance with any deductions necessary because of your previous deposits with your previous provider. Double check your old ISA statements before proceeding if you don't want Mr HMRC sending you a letter! If your last deposit in the old provider was prior to April 5th 2008 then you have not deposited anything for 2008/09 other than that you have added to the Natwest one (you can ignore any interest payments).

To be honest thats exactly what could have happened. They probably didn't register my last deposit with my old provider (gosh NatWest is so slow). How else would I only transfer in some £300 for Tax year 2008/2009 and not the full amount? not my style...

Damn, I have already transferred the £3300 from my Tesco Saving account into the Cash ISA this morning. Hmmm at least I have the NatWest current account, which they made me to open in such cases that too much ISA had been paid into the account as fallback.

Do you think HMRC would sue me over a misinformation caused by my own bank? The problem the previous providers were all online ISA accounts. I dont have any statements.

Investor44

houmie wrote: »

UPDATE: By the way the little print says on the letter something even more confusing:
**you will not be able to subscribe to another cash ISA in the next tax year 09/10 if you continue to subscribe your NatWest Cash ISA in the next tax yea. The tax year runs from 6 April to 5 April. The maximum you can subscribe to a Cash ISA is £3600 and you must not subscribe more than £7200 in total to ISAs in any tax year.

Any comments?
Thanks

Is it the amount of £7200 that you are not sure about?
It refers to the total ISA allowance - including stocks & shares.

If for example, in the tax year, you only put £2000 into your cash ISA then you could also put £5200 into a S&S ISA - but if you put the full £3600 into the Cash ISA then you can only put in £3600 into the S&S ISA.

houmie

Investor44 wrote: »

Is it the amount of £7200 that you are not sure about?
It refers to the total ISA allowance - including stocks & shares.

If for example, in the tax year, you only put £2000 into your cash ISA then you could also put £5200 into a S&S ISA - but if you put the full £3600 into the Cash ISA then you can only put in £3600 into the S&S ISA.

Yes I have figured out the difference between cash ISA and total ISA after I had posted this update. Cheers. But the problem is only regarding cash ISA. I never have touched anything else than cash ISA. I think pretty much what sly_dog_jonah up there explained could have happened.