Screwed up my ISA allowance :( PLS help.

Colin297

Ok,

here is what happened:

I lodged £4550 back in June for my first ever cash ISA.

Two days later, via my online a/c, i took £200 of this out again as i needed it. This left me with a balance of £4350.

So I went into the bank today to try transfer my final £1,290 to reach my full allowance for the year - £5,640. Unfortunately, however, this wouldn't go through. I could only put in £1,090 therefore leaving my balance at £5,440. £200 short.

Apparently i made a fatal mistake by taking that £200 out as you are only allowed £5,640 of lodgements in the tax year.

The real kicker is I'm with First Trust and i needed to reach 5640 to activate the interest rate of 2.5%. Since I haven't reached this target, i sit on 0.5.% interest rate as I remain in the lower band.

Needless to say im pig-sick. I know it's about £100 in interest lost (less i suppose since its September already).

My next questions therefore, are:

1) Is there any way around this? My bank tell me no as the ISA rules are very strict.

2) If not, obviously i need to look at a decent yielding gross account.

3) Should i consider using it for my ISA stocks and shares allowance instead?


As i understand it, as far as First Direct goes, i need to set up a current account paying 1.5k a month into it to qualify me for the 8% a/c. I would be eligible for this should i move banks although I personally don't want to move my current account. Basically i want to find somewhere simply to hedge this 5640 as best as possible.



Thanks in advance.

C

innovate

Tough lesson to learn - - your max ISA allowance will never change by making withdrawals. Anyway, you know that now.

To get decent interest, you could find a new provider who allows transfers-in, and ask them to transfer your entire ISA. Best current deals: https://forums.moneysavingexpert.com/discussion/401374

Just to make sure: do not move the money yourself, you only retain the tax-free status if your new provider makes the transfer.

innovate

Colin297 wrote: »

As i understand it, as far as First Direct goes, i need to set up a current account paying 1.5k a month into it to qualify me for the 8% a/c. I would be eligible for this should i move banks although I personally don't want to move my current account. Basically i want to find somewhere simply to hedge this 5640 as best as possible.

You shouldn't be mixing up the First Direct Regular Saver (8%) with your "£5,640" problem. You can only pay in £300 max a month, for 12 months, making it £3,600 max. It also is not a tax-exempt account.

However, that FD 8% account is a super account for anyone wanting to safe regularly. You do not have to pay 1.5K into the FD current account that you need for it, and you do not have to give up your existing current account in order to benefit from the 8% account. Search the Savings Forum for plenty more info on it.

DannyboyMidlands

"As i understand it, as far as First Direct goes, i need to set up a current account paying 1.5k a month into it to qualify me for the 8% a/c. I would be eligible for this should i move banks although I personally don't want to move my current account."

You don't have to move your current account. Simply open a new one and pay £1.5k in and then out again every month by standing order. Use your existing account as normal.

I have several current accounts in order to qualify for various deals with the same £1.5k circulating around them.

innovate

DannyboyMidlands wrote: »

.....and pay £1.5k in and then out again every month by standing order....

You don't even have to do that to qualify. As I said before, there is plenty of info about this on this forum, just search for it.

Or read the T&Cs and figure it out for yourself.

Colin297

innovate wrote: »

You don't even have to do that to qualify. As I said before, there is plenty of info about this on this forum, just search for it.

Or read the T&Cs and figure it out for yourself.

They seem pretty explicit on that requirement tbh.


Anyway, so the consensus is i need to find an ISA i can transfer to? Ill research the best one in this category. I'll likely find better than 2.5% anyway, but i was happy to use my bank which is why i oped for FT in the first place.

Miss_Havisham

Just out of interest (no pun intended sorry). I'm with Nat West and when I try to take money out of my ISA on-line I get a warning message telling me that I can't pay it back in if my account has reached the ISA limit by then. I have to "tick the box" to carry on the transaction.

Do other banks do this ?

antonic

Colin297 wrote: »

Ok,

here is what happened:

I lodged £4550 back in June for my first ever cash ISA.

Two days later, via my online a/c, i took £200 of this out again as i needed it. This left me with a balance of £4350.

So I went into the bank today to try transfer my final £1,290 to reach my full allowance for the year - £5,640. Unfortunately, however, this wouldn't go through. I could only put in £1,090 therefore leaving my balance at £5,440. £200 short.

Apparently i made a fatal mistake by taking that £200 out as you are only allowed £5,640 of lodgements in the tax year.

The real kicker is I'm with First Trust and i needed to reach 5640 to activate the interest rate of 2.5%. Since I haven't reached this target, i sit on 0.5.% interest rate as I remain in the lower band.

Needless to say im pig-sick. I know it's about £100 in interest lost (less i suppose since its September already).

My next questions therefore, are:

1) Is there any way around this? My bank tell me no as the ISA rules are very strict.

2) If not, obviously i need to look at a decent yielding gross account.

3) Should i consider using it for my ISA stocks and shares allowance instead?


As i understand it, as far as First Direct goes, i need to set up a current account paying 1.5k a month into it to qualify me for the 8% a/c. I would be eligible for this should i move banks although I personally don't want to move my current account. Basically i want to find somewhere simply to hedge this 5640 as best as possible.



Thanks in advance.

C

There is no way round this.
Also every year all the ISA providers make a return to HMRC of ISA subcriptions and these are data - matched to make sure there have been no breaches of the ISAregulations.

How do I know this you may ask ?
The answer is I did this Compliance Work for HMRC for approx 13 years.

Colin297

Miss_Havisham wrote: »

Just out of interest (no pun intended sorry). I'm with Nat West and when I try to take money out of my ISA on-line I get a warning message telling me that I can't pay it back in if my account has reached the ISA limit by then. I have to "tick the box" to carry on the transaction.

Do other banks do this ?

I certainly didn't. It went through like a basic online transaction.

Colin297

I see a fair amount of companies allow transfer of previous year's balances.

Does this also extent to transferring my current year's balance? Seems a little unclear.


Edit - Martin Lewis answered this question in his ISA video. Very helpful!

Colin297

Think im going to opt for the Post Office one.

3.01% and a trustworthy bunch. Good stuff.