New Tax Year, New ISA - when to open account?

Ditch_Crawler

As a general rule, are the Best Buys available just before the new tax year begins, as the providers try to mop up all the stragglers, or is it best to wait until after 5 April in the hope that the providers will launch an all-out war to bag the business?

If the former, then will it be possible to open a new account before April 5, but not actually pay any money into it until after April 5? (I have already subscribed up to my limit for tax year 2009/2010)

Ditch

Baldur

Your guess is as good as anyone else's.

Some providers may permit you to open an account but IMHO it's pointless, as you can't subscribe to it anyway, so you may as well open one on or after 6th April.

Ditch_Crawler

Baldur wrote: »

Some providers may permit you to open an account but IMHO it's pointless

There would surely be a lot of point if it meant you could get a better rate of interest! I'm not sure what the regulations would say if I opened an account now, but paid nothing into it, and then opened another account after April 5 with a higher rate, and then paid in my full £5100. I think you are only allowed one cash ISA per year, but does that mean only one account can be opened, or only one account can be used?

Ditch

Baldur

An ISA is only an ISA when a valid subscription is made to it.

5.2 Before a manager can open an ISA, he must hold
• a valid application, which he has accepted (paragraphs 5.8 and 5.9), and
• a valid subscription (paragraphs 6.1, 6.6 – 6.11 and 6.19 – 6.34).
ISA managers should apply this test each year if they need to determine whether
an ISA or subscription to an ISA is valid (paragraphs 12.26 – 12.27).
5.3 An ISA begins from the later of
• the date on which the ISA manager accepts the application form, and
• the date on which the subscription is made (paragraph 6.9).
The manager should record the date he accepted the application (which may not be
before the date of application) in his records. This means that applications may be
accepted before the tax year in which subscriptions can be made.

Ditch_Crawler

Baldur wrote: »

An ISA is only an ISA when a valid subscription is made to it.

Thanks, that seems unusually clear! So a good plan might be to open the Best Buy account which is currently available, but pay nothing into it, and then if there are better accounts flooding the market after April 5, simply open one of those as well, and then ignore the first one.

I am guessing that the institutions will already have thought of that themselves, and there will be some terms and conditions which will make my cunning scheme unworkable.

What happened last year? Did rates suddenly shoot up after April 5, or did they fall? I am sure that the marketing men must have some kind of 'take' on the levels of supply and demand just before and then just after the beginning of a whole new tax year.

Ditch

Baldur

As far as I can recall, from the start of the ISA scheme in 1999, the best rates have tended to be available for the last month or two of the tax year (to mop up funds that have not already been allocated) and continue for relatively short periods into the new tax year to 'harvest' those from savers who like to open their Cash ISA early.

Ditch_Crawler

Baldur wrote: »

As far as I can recall, from the start of the ISA scheme in 1999, the best rates have tended to be available for the last month or two of the tax year (to mop up funds that have not already been allocated) and continue for relatively short periods into the new tax year to 'harvest' those from savers who like to open their Cash ISA early.

Thanks, that is much as I would have expected things to be. Interestingly though, I opened my first ever ISA last November with First Direct at 3% till November this year, which is better than their current rate. And not long ago, First Direct were offering a regular saver ISA at a massive 7% (correct me if I am wrong, but that is what I recollect), and a non-ISA regular saver at 5% gross. Right now, I don't think they are offering a regular saver ISA at all (and I'm not sure about non-ISA regular saver, but it surely ain't 5% anymore!)

Maybe they needed a few readies to pay those bonuses...

Ditch

ps I just checked, and 1st Direct are indeed offering 5% gross on their regular saver non-ISA

Baldur

Ditch_Crawler wrote: »

......not long ago, First Direct were offering a regular saver ISA at a massive 7% (correct me if I am wrong, but that is what I recollect), and a non-ISA regular saver at 5% gross. Right now, I don't think they are offering a regular saver ISA at all (and I'm not sure about non-ISA regular saver, but it surely ain't 5% anymore!)

Maybe they needed a few readies to pay those bonuses...

A lot of water has passed under the bridge (and a lot of money has been printed by HMG) since those rates were available, I opened a Regular Saver ISA last April @ 7% with Saffron Building Society.

I can't envisage a mind-bogglingly 'must have' ISA jumping out of the woodwork in the current financial climate.

Ditch_Crawler

Baldur wrote: »

A lot of water has passed under the bridge (and a lot of money has been printed by HMG) since those rates were available, I opened a Regular Saver ISA last April @ 7% with Saffron Building Society.

I can't envisage a mind-bogglingly 'must have' ISA jumping out of the woodwork in the current financial climate.

It was within the last couple of months that 1st Direct were offering 7%, my fingers remain crossed for the coming year...

Ditch

Baldur

Ditch_Crawler wrote: »

It was within the last couple of months that 1st Direct were offering 7%, my fingers remain crossed for the coming year...

You'll need to cross more than your fingers, it was withdrawn last July - https://www.emoneyfacts.co.uk/news/savings-news.aspx?newsarticleid=187983

first direct

REGULAR SAVER ISA paying 7.00% withdrawn w.e.f. 31.7.09.
31 Jul 2009

Ditch_Crawler

Baldur wrote: »

You'll need to cross more than your fingers, it was withdrawn last July

Like I said in my original post 'correct me if I am wrong', and thanks for doing so. But last July, I was not even looking at ISA's, and my memory for this kind of thing is usually OK - maybe they re-introduced the offer and then withdrew it again?

Ditch

p.s. the 5% (gross) non-ISA regular saver which is currently on offer from 1st Direct is better than the current Best Buy on MoneySavingExpert (these things move so fast that it is difficult to keep up). I opened one of them a couple of months ago, which is when I noticed the 7% ISA, but I had already used my ISA allowance. I am pretty sure that the 5% was reduced shortly after I opened my account, but now it is back on offer. DC