New year's allowance into existing ISA?

intalex

Hi,

Does anyone know if it's ok to add the new year's allowance into an ISA existing from previous years? If so, would I get the same interest rate on the new funds as I would on the old funds?

The account in question is a Santander Flexible ISA opened last year with a deposit of the full year's allowance of £3,600.

Cheers in advance for your answers!

gunmaker

intalex wrote: »

Hi,

Does anyone know if it's ok to add the new year's allowance into an ISA existing from previous years? If so, would I get the same interest rate on the new funds as I would on the old funds?

The account in question is a Santander Flexible ISA opened last year with a deposit of the full year's allowance of £3,600.

Cheers in advance for your answers!

Yes, you can put an additional £5,100 into your ISA but the interest rate you will get depends on the ISA conditions you agreed to when you started it. Most of the ISAs recently only gave interest for a certain time, 12 months for example. If your ISA is coming up to 12 months old the interest rate may be dropping down to around 0.5%. You would do better to transfer it to A&L's Direct ISA paying 2.75% for 12 months from now, or another of your choice. Then you can add this years allowance of up to £5,100 to it.

Check your ISA documentation that you received when you opened it.

Jake'sGran

This is confusing. Last year if you were under 50 the old rules applied , to the best of my knowledge, i.e. you could have max £3600 in a cash ISA.

Now, every adult has an allowance of £10200, half of which can go into a cash ISA.
The other half can be put in a stock & shares ISA or ALL of it can.

I would not put this year's allowance into an ISA for the year 2009-10 but look for one with another bank/building society. Santander have had a lot of complaints.
The link below gives you the official rules.


http://www.hmrc.gov.uk/budget2009/isa-5475.pdf

blueberrypie

intalex wrote: »

The account in question is a Santander Flexible ISA opened last year with a deposit of the full year's allowance of £3,600.

Jake'sGran wrote: »

This is confusing. Last year if you were under 50 the old rules applied , to the best of my knowledge, i.e. you could have max £3600 in a cash ISA.

Not sure what's confusing here - the OP says he deposited £3600. But even so, it certainly *is* possible to have more than £3600 in a cash ISA. It could have £3600 + interest earned, or it could have funds that were transferred in from previous years' ISAs, or both. (I know the Santander Flexible ISA doesn't allow transfers in, but the statement that you could have max 3600 in a cash ISA is misleading at best.)

gunmaker

You are quite correct blueberrypie.

Anyone who had invested the maximum allowed into a cash ISA each year since they began in 1999 would have at least £43,000 + interest invested now. The value of the added interest would depend on whether or not you had shifted it around each year to get the best rate.

http://www.telegraph.co.uk/finance/personalfinance/comment/paulfarrow/7546815/Cash-Isa-rates-show-why-loyalty-doesnt-pay.html

intalex

I opened the ISA and invested the £3,600 quite close to the end of March, hence I still have most of the 12-month window on the 3.5% rate remaining, and it's still worth it for me to stick my new allowance in.

Question is, when I stick the £5,100 into the same account, would it earn the 3.5% for the next 11 months?

Lokolo

intalex wrote: »

I opened the ISA and invested the £3,600 quite close to the end of March, hence I still have most of the 12-month window on the 3.5% rate remaining, and it's still worth it for me to stick my new allowance in.

Question is, when I stick the £5,100 into the same account, would it earn the 3.5% for the next 11 months?

Yes that is correctamundo.

Jake'sGran

blueberrypie wrote: »

Not sure what's confusing here - the OP says he deposited £3600. But even so, it certainly *is* possible to have more than £3600 in a cash ISA. It could have £3600 + interest earned, or it could have funds that were transferred in from previous years' ISAs, or both. (I know the Santander Flexible ISA doesn't allow transfers in, but the statement that you could have max 3600 in a cash ISA is misleading at best.)

I did say LAST YEAR and under 50. I also included the official HMGovernment rules.
This year the max for cash is £5100. Nothing misleading about that!

blueberrypie

Jake'sGran wrote: »

I did say LAST YEAR and under 50. I also included the official HMGovernment rules.
This year the max for cash is £5100. Nothing misleading about that!

I was replying to the bit where you said "you could have max £3600 in a cash ISA."

Even for someone under 50, and even last tax year, that wasn't the case. They could have *contributed* a maximum of £3600 of new money to a cash ISA in 09/10, but they could have *had* as much as £43,000 in a cash ISA, as gunmaker pointed out.

I'm not being pernickety - it's just that there's enough confusion around ISAs without making it worse with incorrect statements or imprecise language.