Clarifying points on a cash ISA

toby_puppy

I had a cash ISA with HAlifax in 2012-13. I had to withdraw some money during year and had a balance of £500 in it on 5.4.13.

I went and paid another £200 into it this morning without thinking.

So, as I am aware you can only have one ISA allowance per tax year, so I can still save the 2013-14 amount into it (even though there's already money in it from 2012-13?)

Also, will the gross rate of 3% still continue to apply to the 2012-13 money and the 2013-14 money?

Now, what if I found a better rate with another bank that accepts transfers? How could I go about transferring mine to a cash isa in a different bank, now that I have added £200 into it on 7.4.13? Am I stuck with the Halifax cash isa now until next year? I'm thinking I won't be able to move it because it wouldn't be a transfer of 2012-13 cash isa as it now includes a deposit made in 2013-14.

Confused, :eek:

marathonic

I believe you can transfer but you must transfer all of it... you can't do a partial transfer.

Then, with the new provider, you can continue to use the remainder of this years allowance.

marathonic

By the way, for regular investments of less than £300 that you referred to in your other thread, no ISA currently accepting applications beats the First Direct Regular Savings account for a basic rate tax payer - not even the 4% Best Buy Regular Savings ISA.

Froggitt

You cant transfer this years ISA to another provider this year. You cant open another ISA for new money this year. You can transfer last years ISA money to another provider.

Dunno how Halifax segregate cash from different years in one ISA account.

vickssinex

When you ask your new provider to transfer your ISA, there is usually an option on the form they give you to fill in to say if you have any new money to transfer (ie paid in since April 6th). You'll have to tick that box on the form.

rb10

toby_puppy wrote: »

I had a cash ISA with HAlifax in 2012-13. I had to withdraw some money during year and had a balance of £500 in it on 5.4.13.

I went and paid another £200 into it this morning without thinking.

So, as I am aware you can only have one ISA allowance per tax year, so I can still save the 2013-14 amount into it (even though there's already money in it from 2012-13?)

That is fine. 2012/13 is history now, the money is in the account, and will remain there unless/until you choose to withdraw/transfer it.

At the start of the new tax year (i.e. yesterday), you have the choice over where you want to put your current tax year allowance. By putting £200 into the Halifax account, you've chosen to commit to paying your allowance in there (until/unless you transfer it - see below).

toby_puppy wrote: »

Also, will the gross rate of 3% still continue to apply to the 2012-13 money and the 2013-14 money?

Yes, it applies to the whole balance of the account.

Just make sure you are aware of when the rate drops. It's usually one year after the account was opened.

toby_puppy wrote: »

Now, what if I found a better rate with another bank that accepts transfers? How could I go about transferring mine to a cash isa in a different bank, now that I have added £200 into it on 7.4.13? Am I stuck with the Halifax cash isa now until next year? I'm thinking I won't be able to move it because it wouldn't be a transfer of 2012-13 cash isa as it now includes a deposit made in 2013-14.

Confused, :eek:

You're not stuck at all. Whilst, for now, you've committed to paying into the Halifax account, if you transfer the whole balance of that account* elsewhere, then you'll be able to continue to pay in what is left of your allowance to the new account.

When you transfer, Halifax will tell the new provider how much of your allowance you have already used this tax year.

* Note - this is in fact a slight oversimplification. The rule is that your current year allowance must stay in the same account until the end of the tax year; you can't split it up. So you can transfer all of your 2013/14 payments elsewhere, and then keep adding (leaving your 2012/13 payments in Halifax). But I can't see any point of doing this in your case (you want the highest interest rate on the whole balance), so I'd suggest transferring the whole balance, when the rate drops.

badger09

rb10 wrote: »

That is fine. 2012/13 is history now, the money is in the account, and will remain there unless/until you choose to withdraw/transfer it.

At the start of the new tax year (i.e. yesterday), you have the choice over where you want to put your current tax year allowance. By putting £200 into the Halifax account, you've chosen to commit to paying your allowance in there (until/unless you transfer it - see below).



Yes, it applies to the whole balance of the account.

Just make sure you are aware of when the rate drops. It's usually one year after the account was opened.



You're not stuck at all. Whilst, for now, you've committed to paying into the Halifax account, if you transfer the whole balance of that account* elsewhere, then you'll be able to continue to pay in what is left of your allowance to the new account.

When you transfer, Halifax will tell the new provider how much of your allowance you have already used this tax year.

* Note - this is in fact a slight oversimplification. The rule is that your current year allowance must stay in the same account until the end of the tax year; you can't split it up. So you can transfer all of your 2013/14 payments elsewhere, and then keep adding (leaving your 2012/13 payments in Halifax). But I can't see any point of doing this in your case (you want the highest interest rate on the whole balance), so I'd suggest transferring the whole balance, when the rate drops.

rb10 is correct

Just need to stress that YOU shouldn't try to transfer your ISA anywhere. If/when you find a provider offering a better rate, which allows transfers in, ask them to organise the transfer for you!

Froggitt wrote: »

You cant transfer this years ISA to another provider this year. You cant open another ISA for new money this year. You can transfer last years ISA money to another provider.

Dunno how Halifax segregate cash from different years in one ISA account.

Yes you can (or rather your new provider can). As rb10 correctly said, the rule is that current year's subscriptions must all stay together.

toby_puppy

frstly, thanks for your replies - makes things a bit clearer.

Just something else I was pondering:

I noted that I opened the Halifax Isa on 11.4.12, so although the 3% rate is showing now, I have a feeling that might drop when it hits 11.4.13.

So, just say I moved all the money out of it to another better rate provider that accepts transfers - that would be £500 of
2012-13 isa savings and 2013-14 deposit of £200, making a total of £700 deposited in a new isa account, all paying a gross rate of x amount on the full total.

hypothetical question - if I had to draw out £300, what would they just use £100 of the 2012-13 money and £200 of the 2013-14 money meaning that I would lose out on putting another £200 back in for 2013-14, or would they use £300 off the 2012-13 money, leaving my remaining allowance for the year intact?

I have a feeling they would use up the 2013-14 deposit first and any remainder out of the previous year? So either way, you wouldn't be able to get back to the £500 from 2012-13 and you wouldn't be able to recover your 2013-14 allowance either?

I think someone might know what I'm trying to ask , I know it's only pence of interest we are talking but I'm just curious as to how withdrawals are treated.

Yorkie1

My understanding is that they don't necessarily apportion withdrawals according to tax years like that. Subject to any specific rules on that ISA, you can withdraw as much as you like.

However, to answer the broader question about depositing, you can only deposit the annual amount limit once, so irrespective of how much you withdraw, you can only deposit a further £5560 into your ISA this tax year (because you've used up £200 of your cash annual allowance of £5760).

toby_puppy

Thanks Yorkie

innovate

Yorkie1 wrote: »

However, to answer the broader question about depositing, you can only deposit the annual amount limit once, so irrespective of how much you withdraw, you can only deposit a further £5560 into your ISA this tax year (because you've used up £200 of your cash annual allowance of £5760).

That's correct, it doesn't matter at all which year any withdrawal would go against because your allowance for the current year is only ever reduced by deposits you make.

Say you had transferred £10K from previous years and withdrew £9,000 but had not deposited anything into a cash or S&S ISA in the current tax year. You would then still be able to deposit up to £11,520, all of which could go into the S&S ISA, and up to £5,760 of which could go into the cash ISA.