Cash ISAs: The Best Currently Available List

2010

Opened a cash ISA on 3/4/24,funded it on 12/4/24, have I opened a cash ISA in the current tax year?

RG2015

2010 said:

Opened a cash ISA on 3/4/24,funded it on 12/4/24, have I opened a cash ISA in the current tax year?

The answer is no, but your question has no relevance to the ISA rules.

As per the Gov.uk website;

Putting money into an ISA

Every tax year you can save up to £20,000 in one account or split the allowance across multiple accounts. The tax year runs from 6 April to 5 April.

https://www.gov.uk/individual-savings-accounts/how-isas-work

pecunianonolet

slinger2 said:

pecunianonolet said:

slinger2 said:

pecunianonolet said:

slinger2 said:

pecunianonolet said:

slinger2 said:

pecunianonolet said:

slinger2 said:

For a flexi ISA it's only the "net" deposit (for the current tax year) that matters. So if you add £3000, take out £800 and put back £700 (again: all in the current tax year), your net position is £2900 and you've got £17100 of your allowance left (assuming no other ISAs)

But would that not open the door to potential fraud? 

Let's say you put your full 20k in a 1y fix with any other provider. Let's say use use the 5.05% Virgin 1y fix. Now you have subscribed your full allowance with Virgin. 

Now let's say you have another 15k available. Now you put those 15k into the Chip ISA EA flexible ISA and it stays there until March 2025 and you get interest paid on this amount, which is paid back into the ISA. In March 2025 you withdraw the 15k and only the accrued interest is left.

According to what you say, the net position on 5th of April with Chip would be £0 and the net position with Virgin £20k. However, interest was earned tax free on 35k, when you can only subscribe with 20k. This would be a breach of ISA rules.

I therefore think what you say is not 100% clear. 

If I put £3000 into Chip, take out £800 and put £700 back I got still only 17k allowance left to subscribe (either with Chip or another provider) but are eligible to put £17100 back in. Made up of my remaining 17k annual allowance and £100 to replace what I took out previously with Chip.

if I understood the rules correctly, let's say in the above example I have not subscribed with any other provider and only put 3k into Chip and after the transactions the balance is £2900 plus interest. if I now tell Chip to transfer my full balance to another provider (2900 plus interest) I would have lost £100 of my annual allowance as I didn't replace it with Chip before the transfer took place.

That's why I think the way Chip shows this data is misleading.

Lots of things are possible for people who are prepared to lie and break the rules. Once you have subscribed your full £20k you are not allowed to subscribe more.

That's not the point, the point is that Chip is imho misleading the way they show this info in their app. So somebody not familiar could very easily be stung when putting some funds into an ISA with another provider and into Chip by relying on the Chip info because account balance and subscription are not the same in this instance but Chip makes it look like it is.

I think we can all agree than Chip should be giving savers the correct amount. Maybe I'm wrong but my understanding is that in your example (£3000 - £800 + £700) the account balance and subscription would be the same, ie £2,900 (flexi ISA, no "old" money, no interest). For a non-flexi the subscription would be £3,700.

When you go in Chip to Profile --> ISA allowance

ISA allowance used for 24/25

Now split into Stocks & Shares ISA and Cash ISA. In the overview Chip shows you what allowance you have used. This number is the same as the balance of funds in the ISA.

If you pay into the Chip ISA 3k, the allowance used shows £3000, if you now take £800 out the allowance will show £2200. It is always the balance they show. However, in this case they don't show anywhere that you already subscribed £3000 with Chip and that your overall subscription left is 17k.

Somebody less familiar with the rules could now see this as they have £2200 balance in Chip and and now put with a different provider (new rules) £17800 in a fix. 

Assuming no further transactions have taken place Chip would now tell HMRC that they had a subscription of £3000 and the other provider would tell HMRC of a subscription of £17800

HMRC would now see that an oversubscription took place of £800 and ISA rules were broken. This could now invalidate the Chip ISA either entirely and/or the interest earned on £800 could become taxable. However, would that now be interest earned on £800 in Virgin or Chip, as if interest rates are different the rate of interest earned and the resulting tax liability would change too.

My point being is that I need to make sure that by the end of the tax year subscriptions with different ISA providers match, especially if there were many transactions on an easy access ISA. 

To turn it around, imagine you put 20k into your Chip ISA at 5.1% and in a couple of weeks time you see an attractive fix elsewhere. You can now take 10k out and move into the fix and leave 10k in Chip. In this case you have also broken the rules if you withdraw. You would need to make a transfer from Chip to your new provider of 10k. However, the question is now if Chip would allow partial transfers of current tax year money. If we assume they don't you have only the option to move everything into the fix or leave everything in Easy access. 

In this case the new flexibility rules are not providing any benefit. 

I am sure many will run into this trap, especially if the way this is displayed in the app could lead to false conclusions.

If you pay in £3,000 and take out £800 and it's a flexi ISA, you have subscribed £2,200 and that's what they report to HMRC.

https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors

Again, this would be an open door to earn interest on over 20k now that you can open as many ISA's as you want with other providers. 

6. April 24 --> Pay in 20k to a 1y fix with provider A (full subscription made)
6. April 24 --> Pay in 20k into a flexible ISA with provider B
.
1. April 25 --> Withdraw 20k from flexible ISA B (only interest is left)

Following your logic provider A tells HMRC of net contributions of 20k, provider B would tell HMRC of net contributions of £0. HMRC would understand I have not oversubscribed and replaced my 20k allowance with a different provider. However, for the majority of the year I would have earned interest tax free on 40k. 

If that would be the case nobody should pay any tax on interest anymore as you can park money in various different flexible ISA products for almost a full year and as interest goes back into the ISA it would be earned tax free. 

As far as I know you have to replace money into the same ISA you took it out from.

I might be missing something here but I just can't believe that HMRC would be that stupid leaving such a wide open door open.

Of course, you sign declarations and they can bite you depending on the wording but from an HMRC standpoint it is still not clear and that's why I think it isn't possible. Happy to be proven wrong.

See: https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#flexible-isas

"Withdrawals of current year subscriptions, can effectively be replaced in any current year ISA."

"For flexible ISAs, the ‘net’ subscriptions should be reported on the annual returns of information."

 https://www.gov.uk/guidance/who-can-invest-in-an-isa-if-youre-an-isa-manager

For flexible ISAs, replacement funds can only be credited to the account they originated from.

Further info: https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager

2010

RG2015 said:

2010 said:

Opened a cash ISA on 3/4/24,funded it on 12/4/24, have I opened a cash ISA in the current tax year?

The answer is no, but your question has no relevance to the ISA rules.

As per the Gov.uk website;

Putting money into an ISA

Every tax year you can save up to £20,000 in one account or split the allowance across multiple accounts. The tax year runs from 6 April to 5 April.

https://www.gov.uk/individual-savings-accounts/how-isas-work

Thanks, but it does have relevance to the first question asked when applying for another cash ISA.

"Have you opened a new ISA in the current tax year".

Opened in the last tax year but funded with the some of the current year`s allowance.

RG2015

2010 said:

RG2015 said:

2010 said:

Opened a cash ISA on 3/4/24,funded it on 12/4/24, have I opened a cash ISA in the current tax year?

The answer is no, but your question has no relevance to the ISA rules.

As per the Gov.uk website;

Putting money into an ISA

Every tax year you can save up to £20,000 in one account or split the allowance across multiple accounts. The tax year runs from 6 April to 5 April.

https://www.gov.uk/individual-savings-accounts/how-isas-work

Thanks, but it does have relevance to the first question asked when applying for another cash ISA.

"Have you opened a new ISA in the current tax year".

Opened in the last tax year but funded with the some of the current year`s allowance.

Thanks, but I didn’t see reference to a provider asking that question. I have only ever seen comments about paying into another ISA in the same year.

Which provider is asking this question?

badger09

ortolickus said:

subjecttocontract said:

ortolickus said:

My santander 1yr fixed rate cash ISA matures on 1/5/24. I've opened a 1yr fixed rate cash isa with shawbrook today.

I've said i want to transfer the santander balance to open the account and ticked "wait for the full notice period to be served". Does this mean that my account will be automatically funded with the transfer on 1/5/24? In other words, does the "full notice period" mean the date when the santander ISA matures?

It seems to me the obvious answer to this question is 'yes', but this ISA business seems a complicated minefield and i'd appreciate confirmation from someone knowledgable, if possible please.

No it won't necessarily be transferred on 1st May. Chances are they won't start dealing with your transfer until it matures. So, anything between a couple of days and a couple of weeks.

Thanks - i guess i didn't necessarily expect it the same day; i was more concerned they'd transfer it earlier and i'd incur some penalty.

From your reply, I take it the "full notice period" does indeed mean the date when the santander ISA matures? (Why on earth don't they state this explicitly?)

If the transfer was effected before maturity, & you had evidence that you had not requested this, you would be entitled to compensation for the loss of interest. 

Perhaps to cover products which allow withdrawals or transfers subject to specified notice periods?

badger09

Kim_13 said:

ortolickus said:

subjecttocontract said:

ortolickus said:

My santander 1yr fixed rate cash ISA matures on 1/5/24. I've opened a 1yr fixed rate cash isa with shawbrook today.

I've said i want to transfer the santander balance to open the account and ticked "wait for the full notice period to be served". Does this mean that my account will be automatically funded with the transfer on 1/5/24? In other words, does the "full notice period" mean the date when the santander ISA matures?

It seems to me the obvious answer to this question is 'yes', but this ISA business seems a complicated minefield and i'd appreciate confirmation from someone knowledgable, if possible please.

No it won't necessarily be transferred on 1st May. Chances are they won't start dealing with your transfer until it matures. So, anything between a couple of days and a couple of weeks.

Thanks - i guess i didn't necessarily expect it the same day; i was more concerned they'd transfer it earlier and i'd incur some penalty.

From your reply, I take it the "full notice period" does indeed mean the date when the santander ISA matures? (Why on earth don't they sate this explicitly?)

On this, how should one deal with a fixed provider with whom the default is to reinvest into an unwanted new fix? Submit instructions for an Easy Access rather than just specifying maturity date on a transfer request, as otherwise a penalty might be applied if the ISA has rolled over before the transfer is actioned.

Safest would be to elect for EA on maturity. And keep copies of instructions to both old & new providers😉

badger09

2010 said:

RG2015 said:

2010 said:

Opened a cash ISA on 3/4/24,funded it on 12/4/24, have I opened a cash ISA in the current tax year?

The answer is no, but your question has no relevance to the ISA rules.

As per the Gov.uk website;

Putting money into an ISA

Every tax year you can save up to £20,000 in one account or split the allowance across multiple accounts. The tax year runs from 6 April to 5 April.

https://www.gov.uk/individual-savings-accounts/how-isas-work

Thanks, but it does have relevance to the first question asked when applying for another cash ISA.

"Have you opened a new ISA in the current tax year".

Opened in the last tax year but funded with the some of the current year`s allowance.

BIB 
ISA providers have been asking this question since ISAs were launched. 

It has never been relevant! 

HMRC have never limited the number of ISAs which could be opened. 

Prior to 6 April 2024, HMRC rule was that you could subscribe (pay new money into) only 1 ISA of each type in a tax year. That rule no longer applies. 

Unfortunately ISA providers never found suitable wording. In theory🤔 the new rules should make asking the correct question easier. 

Reed_Richards

2010 said:

Opened a cash ISA on 3/4/24,funded it on 12/4/24, have I opened a cash ISA in the current tax year?

You funded the ISA in the 24/25 tax year, it is a 24/25 ISA.  Whatever money you deposited counts as part of the maximum £20,000 that you can deposit this (24/25) tax year.

refluxer

badger09 said:

Kim_13 said:

On this, how should one deal with a fixed provider with whom the default is to reinvest into an unwanted new fix? Submit instructions for an Easy Access rather than just specifying maturity date on a transfer request, as otherwise a penalty might be applied if the ISA has rolled over before the transfer is actioned.

Safest would be to elect for EA on maturity. And keep copies of instructions to both old & new providers😉

This is the method I've always used and I've never had an issue as a result. If you stick to banks that transfer ISAs electronically, then subsequent transfers from the EA or 'maturity' account are usually fairly quick and even if you wait until after maturity to request the transfer, the loss of interest (compared with arranging a transfer in advance in an attempt to go directly from fix to fix) is minimal. 

The only instances where this approach isn't possible is when the original ISA provider doesn't offer either an easy access account option or a default 'maturity' (essentially easy access) ISA account for the maturing fix to convert into (eg. UBL etc). In those circumstances, you're reliant on both providers to deal efficiently with transfer requests made in advance of maturity and this doesn't always work out, judging by various threads here. I tend to avoid such providers - luckily though, they're in the minority.