ISA Account blocked by HMRC?

baldilocks

Sorry if this is not news to anyone, but I was certainly not aware of it....
I am in the process of changing my ISA provider to gain a better deal, and decided to put in my maximum allowance for this year prior to the transfer. I transferred money from my current account to my ISA account and checked some days later that this had taken place. To my amazement, Natwest had transferred the money from my current account to my ISA (initially) but a few days later transferred it out of the ISA to a savings account (with a paltry interest rate). I was informed by Natwest that this happened because I had not made any deposits to my ISA in the previous tax year (2008/9) and so they were required by HMRC(?!) to block my ISA account. Although this has now been resolved, the block having been lifted and the money transferred from the deposit to the ISA account, I thought it might be worth mentioning, especially if any of you are thinking of doing a last minute deposit into your ISA before tax year end.
Apparently it's all in the small print in the T&C of the ISA

Baldur

That applies to all ISAs, not just Natwest - if you don't subscribe to an ISA for a full tax year, the account has to be reactivated before any new subscriptions can be made to it.

Jonbvn

baldilocks wrote: »

I thought it might be worth mentioning, especially if any of you are thinking of doing a last minute deposit into your ISA before tax year end.

The rush for cash ISA's at the end of the tax-year has always perplexed me. If you have the money available, it is surely much better to open the ISA at the start of the tax year and get a whole years interest.

steveksullivan

In previous years maybe - however in the current financial climate with interest rates on ISAs so bad, I was able to beat the best Isa rates with 'ordinary' savings accounts for the current year

However I will be using my allowance 'at the last minute' so that I dont lose it,hoping that rates will rise in the long term.