Confused about ISA pay-in dates

browneyedboy

Hi,

I signed up for the FD 6.25% mini-cash ISA last weekend and they haven't got the application form through to me to sign yet, so I phoned them up.

They said that as long as I get the signed papers back to them by 5th April so they can open the account before the new tax year, I can still pay into the account under the 2004/05 tax year AFTER 5th April.

My understanding was that you have to pay in on 5th April at the latest, otherwise the pay-in would count for the following (05/06) tax year.

Are FD telling porkies?

Cheers.

Kazza242

You are correct. Your 2004/05 ISA deposit must be in by April 5 2005, at the latest. Any deposits made after April 5, will count towards your 2005/06 ISA allowance. Therefore, if you don't manage to deposit funds in your ISA before the end of this tax year (Apr 5), then you would lose your whole £3,000 allowance for 04/05.

grumbler

browneyedboy wrote:

My understanding was that you have to pay in on 5th April at the latest, otherwise the pay-in would count for the following (05/06) tax year.

I am confused too… I was sure that you must pay in on 5th April at the latest.
However, from my recent experience with FD I think you still have a good chance to finish everything in time, though now you should think about shelling out for the special (next day) delivery...

browneyedboy

Thanks guys.

I opened a cash ISA a couple of years back but then never had cash to pay into it, so the account is still open, but empty. Presumably my best bet then if I don't get the FD application form in the post tomorrow (Saturday), is to put money into the existing cash ISA account now, to take advantage of the 04/05 tax allowance, then transfer it to FD when the account is open. This would ensure I don't miss the deadline.

Cheers.

Kazza242

browneyedboy- That sounds smart. If you don't get to post the application tomorrow, then paying your 04/05 funds into your existing ISA is a good idea. That way, you could transfer your 04/05 ISA to First Direct from April 6 05 onwards and still be allowed to add up to £3,000 during the 2005/05 tax year until April 5 2006.

isasmurf

I believe, but not fully 100% sure on this, that as long as the application and initial deposit are received and accepted before the end of the tax year (5th April) the subscription and account will be regarded as being for that tax year, even if the application is not fully processed and opened until the new tax year.

EDIT:Yes the ISA guidance notes say
An ISA application received near the end of the tax year (for example on the 5th April) will be regarded as opened in that tax year even where the application is not fully processed until after 5th April provided the ISA manager has accepted the application before 6th April. The ISA should be shown as opened on 5th April. The ISA manager should delegate a person or persons to be present in the office to examine all applications to ensure that they are complete (but see paras 5.19 – 5.22), and that a valid subscription has been made.

isasmurf

Kazza242 wrote:

browneyedboy- That sounds smart. If you don't get to post the application tomorrow, then paying your 04/05 funds into your existing ISA is a good idea. That way, you could transfer your 04/05 ISA to First Direct from April 6 05 onwards and still be allowed to add up to £3,000 during the 2005/05 tax year until April 5 2006.

I didn't think FD accepted transfers from previous years subscriptions?

isasmurf

browneyedboy wrote:

I signed up for the FD 6.25% mini-cash ISA last weekend and they haven't got the application form through to me to sign yet, so I phoned them up.

They said that as long as I get the signed papers back to them by 5th April so they can open the account before the new tax year, I can still pay into the account under the 2004/05 tax year AFTER 5th April.

My understanding was that you have to pay in on 5th April at the latest, otherwise the pay-in would count for the following (05/06) tax year.

I don't know FD's application procedure, or how you will be paying into your ISA, but going from my post above you should ensure that you sign the application and enclose a cheque with it, or if transferring funds from another ISA or current account enclosing the transfer instructions with it. An ISA is only opened when a valid deposit is put into the account, so FD are wrong when they say you can pay into it after the 5th April. If you ensure payment instructions are included with your application and the application is accepted by 5th April this should be enough to ensure payment for this tax year... if I'm reading the guidance correctly.

browneyedboy wrote:

I opened a cash ISA a couple of years back but then never had cash to pay into it, so the account is still open, but empty. Presumably my best bet then if I don't get the FD application form in the post tomorrow (Saturday), is to put money into the existing cash ISA account now, to take advantage of the 04/05 tax allowance, then transfer it to FD when the account is open. This would ensure I don't miss the deadline.

If you have not paid into the account you will have to apply for it again. ISA rules say that you must re-apply for an account if you do not pay into it for a whole tax year.

Milarky

isasmurf wrote:

If you have not paid into the account you will have to apply for it again. ISA rules say that you must re-apply for an account if you do not pay into it for a whole tax year.

A handy nugget of information - thank you. Presumably this applies to only to 'new subscriptions' and not 'transfers-in' as well. [If not, I stand corrected]

Caped_Avenger

Milarky wrote:

A handy nugget of information - thank you. Presumably this applies to only to 'new subscriptions' and not 'transfers-in' as well. [If not, I stand corrected]

Maybe i'm misreading what you've put there, but any ISA can become dormant, whether it has been subscribed to in the past or not.

Eg:
2002-03: ISA opened, £3000 subscribed
2003-04: No deposits made.
2004-05: Application form required to re-activate 'dormant' account, in order to subscribe to it.

Bargain_Rzl

I have a related question.

I have a First Direct current account already (because of the free £25 sign-up incentive) so am able to apply for their ISA online rather than needing an application form.

I need to do this before the end of the financial year but I haven't done it yet. Basically I've got £1950 sitting in my FD account, and another £1050 on its way to the FD account from my main current account (due to reach the account on Friday next week as I couldn't send it there until I got paid last Thursday). It may even not go into the FD account until Monday, April 4th.

I assume that I will still be able to get the ISA open on this day, as the deposit will be an internal transfer and will go into the ISA same day/next day????

Or should I be opening the ISA with the £1950 I've already got available, and topping it up when the other £1050 appears?