Halifax Cash ISA - withdrawing & depositing but staying with limit

Orchid*need_mod'tor_help*

I'm really annoyed with Halifax !! So apologies if I babble a little

My husband opened up a cash ISA with Halifax in Jan 2005 with a transfer of £700.

We transfered out £600 in February with the intention of replacing this before the end of the tax year.

Paid in a cheque to take us up to the full £3000 but this was wrongly returned!

They apologised and agreed to credit the ISA account (at no cost to ourselves of course).

This also did not go through ... today they called us to say that this was because we had withdrawn £600 and so cannot replace it as we have already withdrawn it - even if it is within the same tax year.

When I questioned this I was told that this was the rules by Inland Revenue ie. £3000 credit (transfer in) is allowed in for the tax year and monies cannot be withdrawn.

Is this really true?

I thought that so long as the balance on any day in the tax year was not more than £3000 it did not matter if monies were withdrawn and replaced.

Paul_Varjak

Unfortunately, Halifax is correct. The most you can credit in any one tax year is £3000, no matter how much you withdraw! That is just the ISA rules I am afraid.

So, if you are not sure you will need the money, I mwould put it into a high interest account. The Halifax websaver pays 4.9% but this is taxbale of course. Allaince & Leicester have a savings account which pays 5.35% and this is just about the top payer for easy acces and no penalties.

Debt_Free_Chick

Paul

Transfers don't count though, do they? Unless the £700 transferred had actually been paid to the previous ISA in the current tax year too.

If it had been paid in the previous tax year, then this year's maximum contribution would have been £3,000 - surely?

dunstonh

I think the reference to transfer out means withdrawn here rather than transferred to another ISA provider.

Orchid

Thanks Paul .. I did not realise this was the case!

Debt-Free-Chick, dunstonh is correct..I should have used the word withdrawn.

thank you all for your comments .. I've certainly learnt something new

ED

Orchid - if in the new tax year just beginning you + husband have spare £'s for saving, after perhaps putting £3,000 each into a Mini Cash ISA, maybe you could consider the regular, monthly savings account of Derbyshire Bdg Society which currently pays 5.85% gross. (It does allow one penalty-free withdrawal per year and deposits can vary between £10 and £1,000 per month.)

Paul_Varjak

Debt_Free_Chick wrote:

Paul

Transfers don't count though, do they? Unless the £700 transferred had actually been paid to the previous ISA in the current tax year too.

If it had been paid in the previous tax year, then this year's maximum contribution would have been £3,000 - surely?

You are correct that transfers out do not count. But, as Orchid's husband opened it up with £700 and 'transferred out' £600, as Orchid put it, this could only have been a 'withdawal' and not a 'transfer', since you cannot transfer part of a current year's ISA to another ISA. If you do a transfer of the current year's contribution then you have to transfer ALL of it.

You can do part transfers or previous years' contributions.