MSE News: New tax year means new Isa year

Former_MSE_Helen

This is the discussion thread for the following MSE News Story:

" The new tax year starts today meaning everyone gets a new, tax-free £5,340 cash Isa allowance. But don't delay using it ..."

Read the full story:
New tax year means new Isa year

Valor

"You can open another account to transfer money from old Isas."

This used to be true, but it seems that this year the banks have a new trick.

When I tried to open a new ISA to transfer my old one into, I was forced to put £1 into it. This £1 forms part of my ISA Subscription, so this meant that:

a) I couldn't do this in advance of April 6th (as my 2010/11 Subscription was full)
b) I can't open two ISA's in the same tax year, as with this method both would be "subscribed" to, which I believe is against the rules.

So the most profitable way for me to save used to be two ISA's, one at ~3.5% for new subscriptions, and one at ~3.0% for transfers, but this seems to no longer be the case.

Now I'm forced to choose between leaving my old ISA at it's 0.5% rate and opening a new one at 3.5% (but no transfers) or opening a new one at ~3.0% and being able to transfer into it.

I tried this with Santander and Halifax, both had this new £1 requirement.

Have I gone mad this year? or have the banks just got a little bit cleverer?

Cheers,

Val.

System

I applied for my 2011-12 ISA yesterday, to get as much interest as possible for the tax year.

I went for the NatWest e-ISA because it doesn't have an introductory bonus and pays interest monthly and you can transfer in funds from other accounts, and it is instant access. Interest starts at 2% AER rising to 2.5% AER when over £30K

I know there are better interest rates, but they have introductory bonuses, or fixed terms with penalties for withdrawals (close account) or are with an organisation which I would not trust. (Satan...der) so I went with the option that best fits my needs.

System

Valor wrote: »

This used to be true, but it seems that this year the banks have a new trick.

When I tried to open a new ISA to transfer my old one into, I was forced to put £1 into it. This £1 forms part of my ISA Subscription, so this meant that:

If you opened the ISA using an online application, then many of the banks have simplified the application form and you do have to enter a minimum of £1

A.F.A.I.K. - you then complete the ISA transfer form (once the account paperwork arrives) and you do not need to deposit the £1 - hence you have not used up your allowance and can open another account.

This is what I was informed when I asked the bank's online chat.

Niksan

Odd, I opened an ISA with Halifax on the 5th and didn't need to fund it, I would however need to fund it to get the big rate, then again, with nothing in it, it doesn't really matter what the rate is. Unless I'm missing something?

Leothecat

Valor wrote: »

This used to be true, but it seems that this year the banks have a new trick.

When I tried to open a new ISA to transfer my old one into, I was forced to put £1 into it. This £1 forms part of my ISA Subscription, so this meant that:

a) I couldn't do this in advance of April 6th (as my 2010/11 Subscription was full)
b) I can't open two ISA's in the same tax year, as with this method both would be "subscribed" to, which I believe is against the rules.

So the most profitable way for me to save used to be two ISA's, one at ~3.5% for new subscriptions, and one at ~3.0% for transfers, but this seems to no longer be the case.

Now I'm forced to choose between leaving my old ISA at it's 0.5% rate and opening a new one at 3.5% (but no transfers) or opening a new one at ~3.0% and being able to transfer into it.

I tried this with Santander and Halifax, both had this new £1 requirement.

Have I gone mad this year? or have the banks just got a little bit cleverer?

Cheers,

Val.

This is exactly the question I came to ask. I have just just opened the Halifax ISA but not yet funded the account nor filled in the ISA transfer form. I don't really understand ISAs but it suddenly occurred to me that perhaps doing what you have outlined above, might be possible. So I came here to ask the question.
Any advise very very gratefully received! TIA

Lokolo

Leothecat wrote: »

This is exactly the question I came to ask. I have just just opened the Halifax ISA but not yet funded the account nor filled in the ISA transfer form. I don't really understand ISAs but it suddenly occurred to me that perhaps doing what you have outlined above, might be possible. So I came here to ask the question.
Any advise very very gratefully received! TIA

Whats your question exactly?

spikyone

Valor wrote: »

This used to be true, but it seems that this year the banks have a new trick.

When I tried to open a new ISA to transfer my old one into, I was forced to put £1 into it.

Valor wrote: »

I tried this with Santander and Halifax, both had this new £1 requirement.

I have both of these and didn't have to deposit anything immediately.

Although Halifax say you have to credit £1, a transfer-in counts towards this. And their requirement is that you deposit within 28 days for either transfers or deposits - see the summary box tab here. So it would've been fine to open the account in the 2010/11 tax year for the current year's allowance or to transfer.

Santander seem to have no consistency (maybe as a result of being B&B, A&L, Abbey, etc, maybe just because their service is apparently poor), but I went into my local branch on April 1st - yes, I know - and managed to open an account without depositing. They don't accept transfers on any account with a decent rate anyway.

Since both these accounts are still available you haven't missed out, but it's still worth knowing for next ISA season I guess.

Leothecat

Lokolo wrote: »

Whats your question exactly?

Sorry that was very unclear.....:o
Ok I have this morning opened a Halifax ISA and was going to transfer from 2 previous years' Abbey accounts into this new one @3%. I was also going to fund this new account with this years Isa allowance.

It then occurred to me that perhaps I could open a new Santander Isa @ 3.5% and not contribute any new money into the Halifax Isa. Instead I would put my full years Isa allowance into the Santander Isa.

My question is:
Can I open 2 Isa in 1 year, transfer old money into 1 of them and fund the other with new Isa allowance?

Thanks!

Lokolo

Leothecat wrote: »

Sorry that was very unclear.....:o
Ok I have this morning opened a Halifax ISA and was going to transfer from 2 previous years' Abbey accounts into this new one @3%. I was also going to fund this new account with this years Isa allowance.

It then occurred to me that perhaps I could open a new Santander Isa @ 3.5% and not contribute any new money into the Halifax Isa. Instead I would put my full years Isa allowance into the Santander Isa.

My question is:
Can I open 2 Isa in 1 year, transfer old money into 1 of them and fund the other with new Isa allowance?

Thanks!

Yep yep yep.

The Halifax one you opened this morning - you haven't put any money into this? (i.e. its £0 balance)

If if it £0. You need to follow the rest of these instructions:

http://www.halifax.co.uk/savings/accounts/cash-isas/transfer-your-isa/

You've obviously done Step 1, so just onto Step 2

Leothecat

Thanks Lokolo! I was hoping you would say that