Mini ISA question

brodev

If I open a mini ISA today I know that I cannot open a maxi ISA till next tax year. My question is : if i come into extra money and wish to open a maxi ISA can I close the mini ISA that I have just opened and make way for a maxi ISA?
I hope the above makes sense. ::)
TIA

Milarky

Don't think so. People who had opened two types of ISA 'unknowingly' were required to close the second opened ISA. i]If you closed the cash ISA first, waited a while, and then applied for a Maxi ISA know's to know? - the Inland Revenue at some stage, I suspect, since ISAs are recorded against your [b]National Insurance number[/b][/i

What you can do however, is open a mini-equity ISA and put upto to £3000 in that..... Alternatively, use a relative to open a Maxi ISA 'for' you. If there is any gain then they will be exempt from it, and they can gift to you at the rate of £3000 per annum - as you can to them. But I have to ask what are the attractions of an equity-based maxi ISA now that the dividend tax credit can no longer be reclaimed? Great if your investment doubles in a year, but not much use otherwise.

ffacoffipawb

But I have to ask what are the attractions of an equity-based maxi ISA now that the dividend tax credit can no longer be reclaimed? Great if your investment doubles in a year, but not much use otherwise.[/size]

Still useful for a higher rate (successful club owning) taxpayer!

dunstonh

some funds are also still tax free, such as gilt funds and corporate bond funds. The 40% tax payers have most to gain though.

Also, dont rule out capital gains. Maximum contributions over the years into a MAXI ISA soon builds the funds up and CGT would very soon be an issue if it was in a unit trust or OEIC.

isasmurf

If I open a mini ISA today I know that I cannot open a maxi ISA till next tax year. My question is : if i come into extra money and wish to open a maxi ISA can I close the mini ISA that I have just opened and make way for a maxi ISA?

Technically no. However the Inland Revenue say "Where a saver subscribes to an incompatible combination of mini and maxi ISAs, the first invalid ISA can be repaired to the extent that neither subscription limit for any component in a maxi ISA, nor the overall subscription limit are exceeded." They say each case will be considered on it's own merit, and you will be required to repay any tax relief from the invalid ISA until it is "repaired".

If you closed the cash ISA first, waited a while, and then applied for a Maxi ISA know's to know? - the Inland Revenue at some stage, I suspect, since ISAs are recorded against your National Insurance number

Yes, the Inland Revenue will know as your ISA provider is required to send details of all ISAs they manage to them every year.

Milarky

I have to ask, in light of saver smurf's brilliantly funny satire of a an Inland Revenue explanation .... what! you mean it wasn't a made up quote?... why anyone bothers to have an ISA? They are just financial 'bear traps' aren't they, devised to bamboozle the average Joe Saver into thinking that they are getting something valuable.

I was thinking about this the other day... If you built up your life's savings in ISAs, yes you would escape some tax during your lifetime but, unlike spousal [joint] savings you are in reality just converting this money into inheritance tax [granted, you can reverse it as any time you are alive] because it can only be in your name, and can only be passed to a surviving dependant via your estate.... Not very 'clever' is it [unless you're Gordon Brown]?

The points already made, that for 'some' people and for 'some' of the time [equity] ISAs do have advantages are all perfectly valid - I'm not disputing that. However where does the true 'advantage' geniunely lie? I suspect that the 'danger' of ISAs really lies in the 'inertia' that they induce within savers by making it difficult to transfer from one provider to another, making it difficult for those savers [I suggest that the majority of people with whatever type of ISA would not see themselves as 'investors'] to understand the basic 'rules' affecting their choice of 'investment' - as instanced by this thread - and the unwise 'bundling' [i.e. conflation] of savings and investment products by the very designation of 'ISA'.

Remember that 'PEPs' and 'TESSAs' were completely different vehicles, and nothing about their names suggested otherwise. 'Equity' and 'cash' ISAs are just as different from each other as this. If 'ISAs' were compatible, for instance, transfers between 'types' would be allowed. But while the Inland Revenue may have difficulties in the use of the English language [see above], they aren't 'stupid' . Allowing transfers between ISA 'types' would simply be a back door means of saving £7000 pa into tax-free savings, and they are proposing to reduce it to £1000 on account of the very popularity of these tax-free savings.

So if equity ISAs have a 'future', it is a rather complicated one. Just as the 'tide' runs out, and ISA sales dry up, the govt has the 'jolly weeze' idea of bringing out new 'ISA-style' [branded 'stakeholder'] vehicles. Unlike ISAs, we are promised, these will be 'transparent' and 'straightforward' investment vehicles and there won't be the possibilty of mis-selling because no one will actually 'sell' them, they will 'market' them instead!

So 'successful' have [equity] ISAs been that it has been found necessary to inject fresh blood in the form of these new 'stakeholder' products. Hmmm! I don't think so..

Let's be honest here. equity ISAs are just 'dead' money investments, and no one has the heart to admit that they have been a flop.

Tax free savings, however, have been a growing success - despite the heavy handed treasury restrictions placed on Cash ISAs [e.g cannot be use to build up cash savings on revolving balances]. The govt is starting to lose too much tax this way, and has decided to apply some brakes here [hoho! not tax 'breaks'] But it is rather 'useful' that they have devised new 'investment' vehicles in the form of stakeholder products at a time when equity ISA sales are diminishing.

Anyway that's just my opinion ;D