Reaching my limit

lucasite

Hi all,
Ive been making extra effort this year to transfer money into my ISA. So Ive just totally everything up and so far since 1st April I've transferred £5100 into my ISA. And Ive withdrawn £200.

I know that the annual limit is £5000, so what happens now. Am I not allowed to transfer anymore money into my ISA? Or will I incur charges?

Im trying to save to buy a house, so I want to put my monthly pennies somewhere. Should I be thinking of opening another normal savings account to put my transfers for the next 6 months?

As this ISA belongs to me, are we allowed to open a new ISA in the name of my wife, and utilise the £5000 of that too?

Any advise gratefully appreciated.

Luca

4$£&*(£$&*(!

Your annual limit is £5,100 in total deposits, which means the £200 you have drawn out you cannot put back into this tax year.

You cannot subscribe more than £5,100 into this account in a tax year. Usually what will happen if you try to put more money in is you will get a message saying you cannot do this, or the money will be returned to the account it came from in the first place. Some providers may charge you for this as you need to ensure you do not oversubscribe in any one tax year.

The £5,100 allowance is per adult, not per couple, so your wife's allowance is totally different. That means with your wife you have another £5,100 allowance she can use. Two simple options in this scenario - either open a brand new ISA in her name and use her allowance, or if you want to continue saving in your name then you have to find another non-ISA savings account.

Edit - I note you say your deposits are since 1 April. The 2010 tax year began on 6 April, so any deposits that cleared your account by 5 April at the latest would have gone to last year's tax allowance so if you have counted transactions between 1-5 April in your calculations you can actually knock these off your allowance use for this tax year.

LongTermLurker

As CitySlicker says, the tax year starts 6 April not 1st, so only count deposits since then. You keep saying £5000 limit, but it's £5100.

It makes sense to start up a cash ISA in your wife's name, but note that once the cash goes in there it will be her personal cash to do with as she wants - not normally a problem, but worth remembering that the I means Individual.

There is another side to the ISA coin - you can put up to £9200 in a Stocks & Shares ISA, minus any cash subscriptions, so in your case you could invest a further £5100 and your wife £9200 if you wished. However, you say you want to buy a house and that would usually make a S&S ISA unsuitable, as it's a long term investment, with an absolute minimum recommended timeframe of 5 years and preferably 10 or more. Not suitable for you, but worth knowing about.

lucasite

Thanks for feedback and advice. Its been very helpful. I think I will go ahead and setup a second ISA in my wifes' name.
One last question.
Is it easy to transfer my ISA to a new ISA account. I notice from some quick online research, that my current rate is quite low compared to others.

Lokolo

lucasite wrote: »

Thanks for feedback and advice. Its been very helpful. I think I will go ahead and setup a second ISA in my wifes' name.
One last question.
Is it easy to transfer my ISA to a new ISA account. I notice from some quick online research, that my current rate is quite low compared to others.

It depends on the providers. Some are quick, some are slow.

4$£&*(£$&*(!

It is easy though yes. Never withdraw your money, always use the transfer process. All you need to do is find an account which accepts transfers in, open it however you would normally, then for instance if this is by phone you can tell them, if it is online you usually get a form to download or posted out to you. You put your existing ISA details on this form and send it off, your transfer won't be permitted without this form.

lucasite

Thankyou. I decided to go with transferring to Intelligent Finance, they seemed to have the best rate currently. However I was abit stumped when filling out their online form.
Despite the website saying its accepts transfers from existing cash ISAs, the application form had the following condition:
you must not have already contributed to another Cash ISA in this tax year

So I guess transferring to that ISA is out of the question, as Ive already been contributing to my HSBC ISA for the past 6 months.

My question is, is this a common condition? Am I going to have to wait until next tax year before transferring? Is this maybe to prevent people from contributing more than the annual limit?

4$£&*(£$&*(!

The IF website says:

Don't consider if:

• You've already made a deposit to another Cash ISA in this tax year, unless you are transferring your ISA to Intelligent Finance.

This is because you cannot subscribe to two cash ISAs in one financial year, but transferring your ISA would mean you are closing your subscription to your existing account and starting it up with IF so that really answers your question. If you have doubts about this, phone them. You shouldn't have to wait for next year and the account looks like it will accept your transfer in from this current year.

IF only pays 2.5% interest though, you can do better if you fix or go with an account that has a bonus for so many months, one of Martin's suggestions is Principality at 2.8% which has a bonus of 1% included in that rate for the first 12 months (then when you lose the bonus ditch and switch).

lucasite

Thank you, I need to do some more research clearly.