What to do with money until after April 5th?

girlinabox

Hello,

Yesterday I opened an ISA with Santander, the flexible 3.5% one. I already have a smile ISA which I have used this year (but which is currently empty). I have recently received a cheque which is clear in my bank account and I am wondering what I should do with it until after the new tax year opens. I have been told that I can't put any money into the new one until after April 5th, so I am wondering if I should get it into my smile ISA and then withdraw the cash and pay that into my Santander one once the new tax year opens?

Could someone advise if this is the best thing to do, or should I just leave it sat in my bank account?

Kind regards

Lokolo

How much allowance do you have left in your Smile?

It might be worth depositing the money in Smile. Then come April 6th you can deposit any money you do have into A&L (but of course leaving the money in Smile), therefore you are then maximising your ISA allowance.

girlinabox

Lokolo wrote: »

How much allowance do you have left in your Smile?

It might be worth depositing the money in Smile. Then come April 6th you can deposit any money you do have into A&L (but of course leaving the money in Smile), therefore you are then maximising your ISA allowance.

I have contacted smile and they advised me that I have £2420 left for this allowance (I'm not a great saver - I had constant car problems I have had to pay for!). The whole reason behind me opening the Santander one was because of the better interest rates. I only opened the smile one because my bank account is with the Co-Op.

The lump sum I have is around £2500. I wondered if there was a benefit to me putting the money into smile until I can move it out and put it into Santander?

Batchy

is there any penalty for taking money out of the smile if you did deposit it, as it wont be in for the full month you might end up losing interest on the 2.5k for a month as that was already in there, in an attempt for 10 days gain of what ever it is you wanted to deposit in the new one, its not worth it really, more hassle than its worth. If there is no penalty, sorted.

Do you think you will be able to save more than the £5100 cash in 2010/11 if not, dont worry too much about it. :-)

girlinabox

Batchy wrote: »

is there any penalty for taking money out of the smile if you did deposit it, as it wont be in for the full month you might end up losing interest on the 2.5k for a month as that was already in there, in an attempt for 10 days gain of what ever it is you wanted to deposit in the new one, its not worth it really, more hassle than its worth. If there is no penalty, sorted.

Do you think you will be able to save more than the £5100 cash in 2010/11 if not, dont worry too much about it. :-)

Hi, no I have never had a penalty from smile, my accounts are linked and I am always taking the money back out of my ISA when I need it which is why it's always empty!

Would you bother? I don't know if I will gain any interest putting it in for only a few days as I don't know when they calculate the interest?

No I very much doubt I'd be able to save more than £5100 in one year. Just out of interest, how would smile know if I was paying into another ISA and vice versa?

MoneySavingUser

They probably wouldn't - but you declare on the application form that you will only 'subscribe' (i.e. add new money) to 1 cash isa per year - and if HMRC find out they could ask you to pay tax on the interest

david78

girlinabox wrote: »

Hello,
Yesterday I opened an ISA with Santander, the flexible 3.5% one. I already have a smile ISA which I have used this year (but which is currently empty).

Hmm ... have you paid into two different cash ISA's this year then?

girlinabox wrote: »

I have contacted smile and they advised me that I have £2420 left for this allowance

This suggests you paid some money into your smile ISA but then withdrew it. You have £2420 allowance left now. However, this must be paid to the smile ISA. You can't put the unused allowance into the Santander one. The only way you can do this is if you formally transfer the existing balance of £0 and remaining allowance of £2420 to Santander (which you haven't done as Smile still think your ISA is with them).

Can you be clearer what you have done, then we can help you on here? It is possible that the HMRC will turn a blind eye to this in the current tax year as they have been making concessions for 50+ people who needed an additional ISA to top up when their allowance increased on 6th October.

girlinabox

david78 wrote: »

Hmm ... have you paid into two different cash ISA's this year then?

Hi there. No, I have opened my Santander one a couple of days ago but not put anything in it yet.



This suggests you paid some money into your smile ISA but then withdrew it. You have £2420 allowance left now. However, this must be paid to the smile ISA. You can't put the unused allowance into the Santander one. The only way you can do this is if you formally transfer the existing balance of £0 and remaining allowance of £2420 to Santander (which you haven't done as Smile still think your ISA is with them).

Can you be clearer what you have done, then we can help you on here? It is possible that the HMRC will turn a blind eye to this in the current tax year as they have been making concessions for 50+ people who needed an additional ISA to top up when their allowance increased on 6th October.

I wanted to know if it was worth me putting money into the smile one for this year (I have £2500 but obviously have allowance of £2420) and then moving it into Santander for the new tax year. I don't intend to use the smile one from the new tax year because Santander is better interest. Basically, will I gain anything from putting the money into smile for a few days, will I gain any interest payments? Or should I leave it in my bank until after April 5th and then put it in Santander?

rb10

The answer is ... it depends.

If, including the £2420, you are likely to use up your whole allowance (of £5100) for 2010/11, then it's probably best for you to put it into Smile now, and then transfer it to another ISA ASAP. (See here).

But, if there's no chance that, with this £2420, you'll reach the £5100 limit over the next year, then you might as well just wait, and put it all in Santander on 6th April.

girlinabox

rb10 wrote: »

The answer is ... it depends.

If, including the £2420, you are likely to use up your whole allowance (of £5100) for 2010/11, then it's probably best for you to put it into Smile now, and then transfer it to another ISA ASAP. (See here).

But, if there's no chance that, with this £2420, you'll reach the £5100 limit over the next year, then you might as well just wait, and put it all in Santander on 6th April.

Thank you, I very much doubt I'll reach £5100 this year alone so I'll just keep hold for now and put it in Santander in a couple of weeks.