ISA limit increase over 50's

miller

My Dad is about to consolidate some instant access ISA's and this years' £3600 subscription to a fixed rate cash ISA.

As you cannot subscribe to another ISA in the same tax year and fixed rate ISA's do not permit additional subscriptions, will the £1500 additional allowance that comes into force in October (for over 50's) effectively be lost if he goes ahead with this?

Baldur

Until HMRC release details of the implementation of the increased allowance, nobody knows with any degree of certainty.

david78

miller wrote: »

My Dad is about to consolidate some instant access ISA's and this years' £3600 subscription to a fixed rate cash ISA.

As you cannot subscribe to another ISA in the same tax year and fixed rate ISA's do not permit additional subscriptions, will the £1500 additional allowance that comes into force in October (for over 50's) effectively be lost if he goes ahead with this?

Actually it depends on the provider. Some allow you to open and pay into multiple ISA accounts with them in the same tax year (Nationwide, M&S do for example). The actual rule is that you can't open cash ISA accounts with more than one ISA manager in the same tax year. So your Dad may be able to take out another fixed rate ISA bond with the same provider (i.e. manager), or a variable rate ISA with the same provider to top-up his contribution to the full £5100 (assuming he's over 50).

I would imagine that all of the Banks and Building Societies will allow this to happen to ensure they get their share of the extra savings bounty. They are rather despirate for cash, after all.

marshall2k

Lloyds TSB allowed multiple payments into their fixed rate ISA I set up last year. Might be the case for your Dad's provider too.

Baldur

david78 wrote: »

The actual rule is that you can't open cash ISA accounts with more than one ISA manager in the same tax year.

Your interpretation is incorrect and totally at variance with the ISA Regulations and Paragraph 3.4 of the HMRC Guidance Notes for ISA Managers:

3.4 To be eligible to subscribe to an ISA an investor must
• be an individual
• be aged 16 or over if subscribing to a cash ISA, or 18 or over if subscribing to a
stocks and shares ISA
• be resident and ordinarily resident in the United Kingdom or, if not so resident,
be performing duties as a Crown employee serving overseas and paid out of
the public revenue of the United Kingdom (typically a serving member of the
armed forces, or a diplomat), or be married to, or in a civil partnership with, such
a person (paragraph 3.6)
• not have subscribed to another ISA of the same type in that tax year (but where
a cash ISA is transferred to a stocks and shares ISA, see paragraph 11.12a)
and
• not have exceeded the overall subscription limit (if 18 or over).

fullstop

Think there will be lots of confusion and delays with the new limit with Regular Saver ISAs , was thinking about The Principality BS Regular Saver ISA and only being able to top up 1 March and 5 April.

Hungerdunger

fullstop wrote: »

Think there will be lots of confusion and delays with the new limit with Regular Saver ISAs , was thinking about The Principality BS Regular Saver ISA and only being able to top up 1 March and 5 April.

Having signed up to this account a couple of weeks ago, I phoned my local Principality office a few minutes ago.

I was basically told what Baldur indicated above - that the Building Societies are arranging talks with HMRC to discuss how this will be implemented for those who have already taken out ISAs, but as we won't be able to make extra payments until October at the earliest, we just need to be patient.

martinman3

Baldur wrote: »

Your interpretation is incorrect and totally at variance with the ISA Regulations and Paragraph 3.4 of the HMRC Guidance Notes for ISA Managers:

I am guessing that the flexibility of opening multiple 'mini' cash isas in the same tax, where the combined total was no more than £3000, was probably lost when the rules were "simplified" in April 2008.

It may need to be brought back.

Baldur

martinman3 wrote: »

I am guessing that the flexibility of opening multiple 'mini' cash isas in the same tax, where the combined total was no more than £3000, was probably lost when the rules were "simplified" in April 2008.

It may need to be brought back.

There has, as far as I'm aware, never been any such flexibility - the regulations have always been, since 1999, that you can only subscribe to one Cash ISA per tax year.

Don't confuse the mere act of 'opening' an account with 'opening a Cash ISA' which, in HMRC's terms, involves the subscription of new money to the Cash ISA.

martinman3

Baldur wrote: »

There has, as far as I'm aware, never been any such flexibility - the regulations have always been, since 1999, that you can only subscribe to one Cash ISA per tax year.

Don't confuse the mere act of 'opening' an account with 'opening a Cash ISA' which, in HMRC's terms, involves the subscription of new money to the Cash ISA.

As a previous post mentioned, Nationwide allowed you to split your allowance between a Members ISA Bond and a Instant Access ISA. The total invested could not exceed the £3000 limit at the time.
I can't believe that nobody at HMRC noticed this and told Nationwide they were wrong to allow it.

BruceyBonus

martinman3 wrote: »

As a previous post mentioned, Nationwide allowed you to split your allowance between a Members ISA Bond and a Instant Access ISA. The total invested could not exceed the £3000 limit at the time.
I can't believe that nobody at HMRC noticed this and told Nationwide they were wrong to allow it.

Nationwide get away with it as I believe they report your total ISA subscriptions across all your accounts with them as just being one single ISA - which it is, just made up of several components.