Is it correct.....?

suttonsue

That if you open a fixed rate ISA for a couple of grand in current tax year, you can't open another one with the same provider to make up your isa allowance? I opened a two year fr isa with the post office in August for £2000. I knew I couldn't add to it but thought I could open another fixed rate one for another couple of grand that was a windfall this month, also with the PO but have been told that I can't because I opened a previous fixed rate one.

Lokolo

HMRC say you can, whether the inidividual institutions allow it is another question.

http://www.hmrc.gov.uk/leaflets/isa-factsheet.pdf

The subscription limits will increase on 6 April 2012. From that date you will be able to save up to £11,280. The full £11,280 can be invested in a stocks and shares ISA with one provider or up to £5,640 can be saved in a cash ISA with one provider, with the remaining being saved in a stocks and shares ISA with either the same, or another provider.

I have highlighted the word provider. So technically you are allowed as it's with the same provider.

Please note, the limits there are for next year. This years is £5,340 (and £10,680).

chris_m

You can only contribute to one ISA (or 1 cash ISA and 1 Stocks/Shares ISA) in a single tax year. Therefore, trying to open a second one (which would have needed funds depositing to open it) is not allowed.
Why could you not add the windfall to your first ISA? Is there a deposit limit on it set by the PO, despite the cash ISA contribution limit being, IIRC, £5335 for this financial year?

crittertog

chris_m wrote: »

You can only contribute to one ISA (or 1 cash ISA and 1 Stocks/Shares ISA) in a single tax year. Therefore, trying to open a second one (which would have needed funds depositing to open it) is not allowed.

Not 100% accurate (see the post above yours). For example, Nationwide's ISA accounts form a collective "Nationwide ISA" (for want of a better description), meaning you could open an instant access, 75 day notice, 1 year- and 3 year FR ISA with new funds in the same tax year.

chris_m wrote: »

Why could you not add the windfall to your first ISA? Is there a deposit limit on it set by the PO, despite the cash ISA contribution limit being, IIRC, £5335 for this financial year?

Normally you can only add to bonds for a short period after opening (if at all).

financial_illiterate

chris_m wrote: »

You can only contribute to one ISA (or 1 cash ISA and 1 Stocks/Shares ISA) in a single tax year. Therefore, trying to open a second one (which would have needed funds depositing to open it) is not allowed.
Why could you not add the windfall to your first ISA? Is there a deposit limit on it set by the PO, despite the cash ISA contribution limit being, IIRC, £5335 for this financial year?

Fixed term deposits often only allow either one deposit, or several deposits up to a closure dtae, after which it is closed and you can't deposit any more.

As the Provider, The Post Office has the discretion to allow an individual to open a second cash ISA to accept the remaining allowance and then tie them together under one 'wrapper' for HMRC purposes, but it seems to me that the larger the organisation is, the less inclined to do this they are (presumably because it requires manual administration and most large companies are automated, whereas smaller building socities retain the ability to do things manually.)

xylophone

chris_m wrote: »

You can only contribute to one ISA (or 1 cash ISA and 1 Stocks/Shares ISA) in a single tax year. Therefore, trying to open a second one (which would have needed funds depositing to open it) is not allowed.
Why could you not add the windfall to your first ISA? Is there a deposit limit on it set by the PO, despite the cash ISA contribution limit being, IIRC, £5335 for this financial year?

http://www.postoffice.co.uk/finance/savings-investments/fixed-rate-cash-isa/how-it-works

It would indeed seem to be the case that the op cannot add to this ISA!
This seems a very odd rule - I know that my MIL opened a five year fixed rate with another building society and has made three contributions to bring it up to the maximum for this year.

chris_m

crittertog wrote: »

Not 100% accurate (see the post above yours).

Yeah, he beat me to it

Not something I'd realised actually.

thenudeone

Newcastle Building Society also allow you to split your ISA allowance between different ISA products. http://www.newcastle.co.uk/maximisa/main

suttonsue

I think I'm stymied with the Post office. I can't add to it as it's fixed rate and closed and I can't open another one with them. So as I'm also stuck with the One Provider in any Tax Year rule, that means that I not only can't put any more into my PO isa this year, nor can I top up any of my other isas [with other providers] as they are not the current tax year provider. AAAGGGHHH

Mikeyorks

suttonsue wrote: »

I think I'm stymied with the Post office. I can't add to it as it's fixed rate and closed and I can't open another one with them. So as I'm also stuck with the One Provider in any Tax Year rule, that means that I not only can't put any more into my PO isa this year, nor can I top up any of my other isas [with other providers] as they are not the current tax year provider. AAAGGGHHH

You have 3 choices :-

1. Live with it and do nothing until April 2012. Which is likely the most practical option for £2k.
2. Transfer the PO ISA to a Stock and Share ISA elsewhere. Then close that and invest the proceeds + your extra money into a new ISA this year. As the original PO ISA is then regarded as never having happened. (the PO T&Cs probably inhibit a transfer however?)
3. Close the PO ISA - take all the cash out and open a new ISA with another supplier and adding your extra cash. It's called a self-transfer. Detail here :-http://forums.moneysavingexpert.com/showpost.php?p=48768473&postcount=513 If the PO account doesn't allow withdrawals - or the penalty is too severe - it's back to option 1?

Most Fixed term / fixed rate ISAs are also fixed value. So what you place as your opening deposit is usually it. I'd tend to stick with variable rate if you add less than your annual allowance initially - and you're uncertain of cash flow for the rest of the year.

olip74

Fixed term deposits often only allow ... one deposit

I didn't realise this until my wife and I opened a PO fixed rate cash ISA in my wife's name. We started with £800 and intended to add £25 each month through direct debit. The PO even sent me a direct debit instruction form to set up the payments, then turned around and said they couldn't do it! Now we can't pay any more money in and we can't open another account for the payments, at least not in my wife's name, and I've already contributed to an ISA this year.

The PO's rule is such a stupid and arbitrary one, it may be in the FAQs but I've never come across this before and didn't even think to check. I really think the MSE Web site should flag these things when they draw people's attention to these accounts! I also blame the government for allowing ISAs to be so restrictive with the number you can hold and when, transfers, payments, etc. They're so much hassle to get semi-decent rates and manage that I sometimes wonder if they're worth the bother! Humbug!