Newcastle BS 5% ISA - increased ISA allowance

moonrakerz

From Oct 6th this year over 50 year olds will be able to add £1500 to their ISA for this tax year.
However, if you hold a Newcastle BS 5% ISA, as this is now closed, you cannot add to the money already in this account.
Strictly speaking you cannot open another cash ISA in this tax year; However, Newcastle BS have thought about this, and you can put the extra £1500 into a separate ISA with them but it is all counted as one ISA with HMRC.

There should be a letter about this "MaximISA" scheme on its way to all investors, but as it doesn't specifically mention the 5% ISA I rang the Newcastle and they confirmed what I have said above.

Paul_Herring

Strictly speaking you cannot open another cash ISA in this tax year

No, what the rules state is that you cannot have more than one "open cash ISA."

An "open cash ISA" for the purposes of HMRC is "funds for the current tax year held with a provider." i.e. you cannot have this year's cash ISA money with more than one provider.

How that provider decides to hold those funds (in one account, in separate accounts or in the same numbered account with your closed cash ISA's) is up to the provider.

Newcastle aren't doing anything funny, nor have they had to 'think' about it - it's entirely within the rules for you to have two accounts with the same provider to hold this year's cash ISA.

It's just convenient for ISA providers to restrict you to only one account, in much the same way that it suits them to not allow you to transfer money in (where applicable,) or to hold your closed cash ISA's in the same numbered account as your open ISA (which is most of them I'd guess.)

moonrakerz

Paul_Herring wrote: »

it's entirely within the rules for you to have two accounts with the same provider to hold this year's cash ISA.

I didn't say it was against the rules, I was merely pointing out that many ISA providers will not do what The Newcastle has done and actually has thought about its customers.

"However, the Newcastle is one of only a small number of UK financial institutions which have facilities in place, in accordance with HM Revenue and Customs rules, to enable customers to consolidate their money across a number of cash ISA products this tax year and thus invest to the new limit, even if their existing ISA product is already closed to new funds."

RayWolfe

moonrakerz wrote: »

I was merely pointing out that many ISA providers will not do what The Newcastle has done

Oh, I expect most will. If any are reluctant it will be because of systems problems, not because they don't want the money.
At worst for us (best for them) they will invite FR holders to put the extra money in at a silly interest rate. They are quids in, we do not lose the future benefit of the addition.

hfr45

I'm very unhappy that Newcastle BS is taking this stance because we also have a fixed rate ISA with Northern Rock and their letter says:
"...if you have opened a Fixed Rate Cash ISA this tax year you will be able to make additional depsits into your Cash ISA up to the new limit of £5,100 from 6 October ..."

moonrakerz

.........at 5% ?

driver6

But why cant I just add the extra £1500 to my existing Newcastle Fixed rate cash ISA on 6 Oct? I was told that Newcastle only closed this account in August, so they deliberately did not want to allow "top ups", but "force" us to open another account(but no rates are quoted) Their letter is headed "Great news about your ISA". I dont think so!!

Paul_Herring

But why cant I just add the extra £1500 to my existing Newcastle Fixed rate cash ISA on 6 Oct?

Because Newcastle don't want you to.

This falls into the same category as not allowing transfers in. They're allowed to accept transfers, but they don't have to.

MarkyMarkD

Whilst they desperately needed that money at 5% a few months ago, they don't need any more at such a silly rate. They have no obligation to pay the same rate so why should they?

baby_boomer

Quite.

This is not the provider's fault.

It's possibly the government's fault for changing the rules in the middle of a financial year. But even then it's hardly disadvantaging people, and it's hardly the blunder the Conservatives are claiming it is!

I also had to laugh at the financial press's recent headlines that baby_boomers were being hit by these rules.

The hell we are. It's we who have got the extra ISA allowance early, !!!!!! . Not the rest of you!

If a small section of baby_boomers can't work out how to take advantage, then more fool us

MarkyMarkD

I'm not sure that I agree that it was not a blunder. It was a foolish bit of policy, changing a tax allowance part-way into the tax year, and could have been avoided in lots of ways.

The amount of benefit it gives to an over-50 is so trivial that it would have been better to simply leave the increase until 6 April 2010.