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ISA Before or After next financial year

Hi, sorry if this is totally obvious but I'm not getting the ISA timeline stuff.

My Mrs and I have a savings plan and are looking to save for 2 years for a mortgage deposit.

After doing the research from literally knowing nowt, I've learnt that a fixed rate ISA isn't our option as its a lump sum ISA and I think I'm right in saying we can't make monthly deposits.

So I think I'm right in thinking a variable cash ISA is what we are after BUT this is where I get lost...

From what I gather, if we set up ISA's now (pre April) we can only deposit until 5th April as that's then the new financial year...then what? Do we set up a new ISA, can we transfer what we saved up to that point into the next ISA. Or should we just wait and start an ISA from 6th APril?

Are AER likely to drop next financial year?

Any clarity and advice for this usual-money wasting 1st time saver would be gratefully received.

Btw we are looking to save 400 each pm if that has any relevance to options.

Cheers
«1

Comments

  • rb10
    rb10 Posts: 6,334 Forumite
    If I were in your position, I would open the West Bromwich Building Society ISA now - don't even wait a few days, as I'd expect the rate to drop fairly quickly.

    You can continue paying into the account across the end of the tax year; that is fine.

    Just make sure that the sum of your deposits between 6th April 2013 and 5th April 2014 are no more than the annual ISA allowance (£11,520 for that tax year).

    And make a diary note to transfer your ISA out of West Brom when the bonus expires on 31 December 2013.
  • vpdanas
    vpdanas Posts: 32 Forumite
    Thanks rb10....so just to confirm, if I take out an ISA (from West Brom or whichever ISA provider) but take it out NOW, come April when the new financial year starts I can still pay into THAT ISA after this financial year ends?
  • vpdanas
    vpdanas Posts: 32 Forumite
    rb10 wrote: »
    If I were in your position, I would open the West Bromwich Building Society ISA now - don't even wait a few days, as I'd expect the rate to drop fairly quickly.

    You can continue paying into the account across the end of the tax year; that is fine.

    Just make sure that the sum of your deposits between 6th April 2013 and 5th April 2014 are no more than the annual ISA allowance (£11,520 for that tax year).

    And make a diary note to transfer your ISA out of West Brom when the bonus expires on 31 December 2013.

    Thanks rb10....so just to confirm, if I take out an ISA (from West Brom or whichever ISA provider) but take it out NOW, come April when the new financial year starts I can still pay into THAT ISA after this financial year ends?
  • innovate
    innovate Posts: 16,217 Forumite
    10,000 Posts Combo Breaker
    You could get more net interest if you save some of your money in a First Direct Regular Saver, which currently pays 8% AER. This is taxable, but beats any current ISA rate, even for a higher rate tax payer.

    Use the MSE Regular Saver Calculator to see the difference.

    What I would do in your shoes is:
    1. open 2 good instant access ISAs each (one lot now, one next year)
    2. open 2 First Direct Regular Savers (you might need to first open their Current account(*). You do not need to ditch your existing current account to do that)
    3. put £100 each into your ISAs each month
    4. put £300 each into your FD Regular Savers
    5. on maturity,
      1. deposit the Reg Saver balances into your ISAs.
      2. start another lot of Reg Savers if FD still pay the super interest rate
    The Reg Saver money is locked away for 12 months, bear that in mind.

    (*) with some out-of-the-box thinking, you can both bag £100 for opening that account - - look for the appropriate threads
  • innovate
    innovate Posts: 16,217 Forumite
    10,000 Posts Combo Breaker
    vpdanas wrote: »
    Thanks rb10....so just to confirm, if I take out an ISA (from West Brom or whichever ISA provider) but take it out NOW, come April when the new financial year starts I can still pay into THAT ISA after this financial year ends?

    Yes you can - - though there may be better rates about in April/May time, so a new ISA might be a good idea.

    Best ISA rates are always easy to find in post 1 of this thread, thanks to Kazza and some good souls who hunt down best rates quickly. As rb10 already suggested, usually it's good to strike fast when you see a good rate.
  • innovate
    innovate Posts: 16,217 Forumite
    10,000 Posts Combo Breaker
    PS. I am not familiar with the West Brom ISA - not sure it's the one I would chose since it's just 2.52% and min opening balance is £1,000.

    I might prefer the Coventry BS one, despite it needing 60 days notice for withdrawals.
  • rb10 wrote: »
    Just make sure that the sum of your deposits between 6th April 2013 and 5th April 2014 are no more than the annual ISA allowance (£11,520 for that tax year).

    isn't this a cash ISA? so the limit is £5,760. per person. (or did you mean £11,520 in total for 2 people?)
  • vpdanas
    vpdanas Posts: 32 Forumite
    innovate wrote: »
    You could get more net interest if you save some of your money in a First Direct Regular Saver, which currently pays 8% AER. This is taxable, but beats any current ISA rate, even for a higher rate tax payer.

    Use the MSE Regular Saver Calculator to see the difference.

    What I would do in your shoes is:
    1. open 2 good instant access ISAs each (one lot now, one next year)
    2. open 2 First Direct Regular Savers (you might need to first open their Current account(*). You do not need to ditch your existing current account to do that)
    3. put £100 each into your ISAs each month
    4. put £300 each into your FD Regular Savers
    5. on maturity,
      1. deposit the Reg Saver balances into your ISAs.
      2. start another lot of Reg Savers if FD still pay the super interest rate
    The Reg Saver money is locked away for 12 months, bear that in mind.

    (*) with some out-of-the-box thinking, you can both bag £100 for opening that account - - look for the appropriate threads

    Thanks so much Innovate. Great ideas. Slight downfall I see, using calculator I predict earning £123 in interest a year...upon looking at the terms on 1st direct it says you do indeed need a current account and it costs £10 a month to have one as I earn just under 1500 pm so won't quality for the free account...in theory that wipes out the money made from my Regular Saver account. Wouldn't qualify for the 100 either...damn! Mrs may just earn the 1500 so will check and could do it through her...although you need to fully change banks to them to avoid the £10 monthly charge so may not be keen.

    Ps ... forgive me but just out of interest what is meant by a savings coming to 'to maturity'...is that after a year?
  • vpdanas
    vpdanas Posts: 32 Forumite
    innovate wrote: »
    Yes you can - - though there may be better rates about in April/May time, so a new ISA might be a good idea.

    Best ISA rates are always easy to find in post 1 of this thread, thanks to Kazza and some good souls who hunt down best rates quickly. As rb10 already suggested, usually it's good to strike fast when you see a good rate.

    And again thanks for the advice...so does this mean that after 5th April, does your current ISA stop and a new one automatically start if you don'T do anything...and if the rate drops so you chose to stop and open a new great rate ISA can you then transfer your current savings to that one?
  • vpdanas
    vpdanas Posts: 32 Forumite
    innovate wrote: »
    PS. I am not familiar with the West Brom ISA - not sure it's the one I would chose since it's just 2.52% and min opening balance is £1,000.

    I might prefer the Coventry BS one, despite it needing 60 days notice for withdrawals.

    Yes I've looked at the Coventry one looks....BUT....it was this very ISA that confused me about the timeline thing....they say if you open up an ISA with them NOW you can only pay in with them until 5th April! Hence my query, should I not just wait until 5th April where I can pay right through til APril 2014?
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