Budget 2009: Cash Isa Limit Increased

TREVORCOLMAN

adambro wrote: »

Only if you consider cash ISAs. The potential returns from investing in a stocks and share ISA could be enormous so it is impossible to really quantify what the benefit of being able to subscribe an additional £3000 this year is. The benefit could be as large as the investor is able to acheive.

Ah - but if you invest MORE and the returns go SOUTH then you have lost more!

adambro

TREVORCOLMAN wrote: »

Ah - but if you invest MORE and the returns go SOUTH then you have lost more!

I'm incredibly impressed by your understanding of how investing works.

henben

I am one of those (over 50s) who welcomes the increased ISA limit - ie the total limit, not just the cash element. But the half way through the year introduction is causing stupid muddles. For instance I've just tried to take out the First Direct regular saver ISA (approx 3.6% fixed, averaged over the 12 months contribns). However one of the declarations that I have to make is that I will not be contributing more than £7200 in total to cash+shares ISAs in the current tax year. I rang First Direct to ask them to update their online form but they refuse to do so on the basis that they haven't yet decided whether to offer the increased limits yet. I understand why they might limit me NOW to £3600 on THEIR cash account but why also get me to sign up to limiting myself on the shares side as well? Looks like they won't be getting my ISA business unless they hurry up and see sense.

Mikeyorks

henben wrote: »

Looks like they won't be getting my ISA business unless they hurry up and see sense.

The Budget proposal is precisely that - at the moment, a proposal. And even if Parliament ratify it (highly likely) .... the new increases aren't enabled until 6th October.

http://forums.moneysavingexpert.com/showpost.html?p=21057449&postcount=26

So - First Direct are quite right to stay with the limits as currently provided for by the ISA Regs. You just need to be patient?

TREVORCOLMAN

adambro wrote: »

I'm incredibly impressed by your understanding of how investing works.

No problem - if you wish to know anything more just ask.

henben

Mikeyorks wrote: »

The Budget proposal is precisely that - at the moment, a proposal. And even if Parliament ratify it (highly likely) .... the new increases aren't enabled until 6th October.

I accept that - but all that is needed is a change of wording in the declarations one has to make when applying eg instead of 'I will not contribute more than £7200 ...' they could put something like 'I will not contribute more than the maximum specified by the ISA rules ...'. What annoys me is that they are asking me to sign away my rights NOW to the proposed increase even if/when it does go through later.

And for the terminally confused (probably most people by now) they could include a footnote explaining the current rules and the proposed changes.

I'd also normally accept your advice to be patient - but in this case it is a 12x 1-monthly saver ISA and so if you don't get your first contrib in before May 5th the contribs will run over the end of the next tax year and therefore tie you in to them for another year's ISA.

pennycareful

I'm sure someone out there has looked at the small print in the budget, so can you answer me this please? As an over 50, if I invest £3600 in April will I be able to invest another £1500 in October. Up till now, I didn't think it was allowed to invest in two ISAs in one year, or maybe I misunderstood

henben

pennycareful wrote: »

As an over 50, if I invest £3600 in April will I be able to invest another £1500 in October. Up till now, I didn't think it was allowed to invest in two ISAs in one year, or maybe I misunderstood

My understanding is that (providing the proposal is approved by Parliament) you WILL be allowed to contribute another £1500 but it will have to be to the same provider (ie you wouldn't then have two ISAs - just one that you had made two payments to. After all lots of people don't currently pay their £3600 all in one go).

So you'll need to make sure that you choose a provider who is committed to accepting the full £5100 if it becomes law. First Direct, for one, will not currently commit themselves (see my posts a bit earlier) .

Trying_to_be_good

pennycareful wrote: »

I'm sure someone out there has looked at the small print in the budget, so can you answer me this please? As an over 50, if I invest £3600 in April will I be able to invest another £1500 in October. Up till now, I didn't think it was allowed to invest in two ISAs in one year, or maybe I misunderstood

Henben's response is correct as the legislation currently stands (one ISA subscription per year, not one ISA provider), but may be overtaken by new legislation to allow a second ISA in this particular situation.

Changing anything during the tax year makes everything a muddle, and sorting out one thing will highlight an issue elsewhere, which itself creates an issue somewhere else etc.

Mikeyorks

henben wrote: »

What annoys me is that they are asking me to sign away my rights NOW to the proposed increase even if/when it does go through later.

No more so than any of us who contributed to ISAs from the start of 09-10 and accepted the rates then ..... and still ..... in force. Your 'rights' will be re-aligned once the legislation + the practicalities of implementation are ironed out. Changing your application form hardly resolves the majority issues?

henben wrote:

you WILL be allowed to contribute another £1500 but it will have to be to the same provider

...... nothing is concrete at this point. Consider Fixed Rate products where the T&Cs specifically state only one payment may be made. ISA Managers may not be prepared to re-open these to facilitate the extra payment. So options need to be put in place .... which is the subject of ongoing discussions which couldn't take place before the Budget proposal was announced.