last year and this years ISA limits

Bark01

Hi,
I have an old E-ISA (its a cash ISA) from 08-09 and a new cash ISA for 09-10. I opened the new one with the same company (Natwest) as it had a higher interest rate.

The E-ISA had hit its £3600 limit in 08-09 and my new cash ISA hit its limit recently. When the new ISA hit its limit i tried (out of interest) to transfer my next batch of spare money into the E-ISA and its excepting money again? I can't transfer any money into my new ISA.

Is this correct?

I'm guessing that either my bank should have stopped me transferring money into my the E-ISA when the last financial year ended and I changed ISA's. Or does each ISA get a new £3600 limit each financial year?

rb10

I don't follow exactly what you have done here, but the relevant rules are:

* You may only pay money into one ISA per tax year.
* This does not include transfers between different ISAs, as long as you instruct the receiving bank to carry out an 'ISA Transfer' and do not transfer the money yourself.
* The date when an ISA was opened has no bearing on anything. Only the date(s) when money was paid in is/are relevant.
* You, as a person (not your account(s)) have an annual ISA limit. This is the maximum that you can pay in each tax year. For the under 50s, it is currently £3600, but will be £5100 for 2010/11.

So if your new ISA has been funded with £3600 during 2009/10, and you are under 50, then you cannot pay any money into any ISA until 6th April.

If the old e-ISA did accept money, then you should phone HMRC for guidance. You have broken the rules here. The most likely thing that they will do is tell you not to do it in the future.

What you can now do, however, is transfer one or both of your existing ISAs to another bank, if you can find a higher interest rate elsewhere. To do this, open the new ISA (but don't pay any money into it) and ask the new provider for an ISA transfer form.

dtaylor84

Bark01 wrote: »

Hi,
I have an old E-ISA (its a cash ISA) from 08-09 and a new cash ISA for 09-10. I opened the new one with the same company (Natwest) as it had a higher interest rate.

The E-ISA had hit its £3600 limit in 08-09 and my new cash ISA hit its limit recently. When the new ISA hit its limit i tried (out of interest) to transfer my next batch of spare money into the E-ISA and its excepting money again? I can't transfer any money into my new ISA.

Is this correct?

I'm guessing that either my bank should have stopped me transferring money into my the E-ISA when the last financial year ended and I changed ISA's. Or does each ISA get a new £3600 limit each financial year?

It's not up to your bank - it is up to you. When you open an ISA you have to sign a declaration stating you won't pay in to more than one ISA in one tax year, and that you won't exceed the limit.

HMRC will eventually calculate you deposited too much this year. Then they will probably send you a letter telling you not to do it again, as rb10 says.

cottager

As far as I remember when I opened this a/c last year, one of the conditions was the same as it is now:

Q. Do I need another account with NatWest?
A. Yes. If you do not already have a current account or instant access savings account with us, you will need to open an instant access savings account which can be managed at a branch in the UK. We need this to receive any deposits which may accidentally exceed your annual ISA allowance.

http://www.natwest.com/personal/savings/g2/isas/e-isa.ashx#tabs=section4

So if you have paid in more than your £3600 allowance for the current 09/10 tax year, what should happen in Natwest's case is that they will return the overpayment into your savings (or current) account.

But as rb10 has said, if you are/will be aged 50 or over by 5 April 2010, you are now allowed to subscribe an additional £1500 to your 09/10 cash ISA, making a total of up to £5100 in all for the current tax year.
Does this apply to you? -- if so this would account for the 'extra' you paid being automatically accepted.
http://www.natwest.com/personal/savings/g2/isas/e-isa.ashx#tabs=section1

a27

rb10 wrote: »

What you can now do, however, is transfer one or both of your existing ISAs to another bank, if you can find a higher interest rate elsewhere. To do this, open the new ISA (but don't pay any money into it) and ask the new provider for an ISA transfer form.

Does that mean that in the same tax year, one could transfer two £3,600 ISAs into a new bank and open a third (new) one?

rb10

a27 wrote: »

Does that mean that in the same tax year, one could transfer two £3,600 ISAs into a new bank and open a third (new) one?

Yes. Transfers of any number of ISAs are allowed at any time, and don't count towards your limit at all.

The only restriction is on paying new money in to an ISA.