ISA Help - Confused

hufc2002

Evening all

I am a bit confused with ISAs and seek your help.

I was made redundant 18 month ago and decided to put aside some of my redundancy into ISAs. I opened one in my own name and one in my wife's (both in Dec 11) and deposited the maximum amount in each (£5340).

Both are with Virgin Money, mine is in a 3 year fixed rate at 4% and my wife's is in a variable rate of 3.05% which is reducing to 2.4% in May.

Following Martin Lewis' programme on Friday, I opened us both another ISA each at the 11th hour of the 2012/13 tax year and deposited £2500 into mine and just £1 in my wife's as we don't currently have any other savings. Both ISAs are Lloyds TSB as that is who we bank with and the rate is only 1.45% but understand that it was more crucial just to have an ISA in the 2012/13 which I can't really get my head around.

My first question is what shall I do with the new £2500 that I have just put into that ISA?

If I transfer it elsewhere to a better rate i.e. Santander who are offering 2.5%, by opening that ISA with Santander does that become my 2013/14 ISA? and what happens to the ISA that I have literally just opened with Lloyds?

Am I worthwhile transferring my wife's first ISA with the rate reducing to 2.4%? If so, where to? I don't necessarily need access to this money either. If I do transfer it can I transfer the whole amount (currently £5542)

Really confused!

Any advice would be warmly welcomed.

innovate

Next logical step for you would probably be to read the ISA guide on the main site, several times if need be: http://www.moneysavingexpert.com/savings/best-cash-isa#whatis

The browse round the ISA and Savings forums, and may be even the current account ones.

Give it a couple of days of reading and digesting, then come back with specific questions if not everything has fallen in its place.

Whatever happens, you should be making decisions on what to do with your money because you understand what you are doing with it, not because some random on an internet forum said do x.

hufc2002

Basically I want to transfer the £2500 from my Lloyds ISA which I opened at the 11th hour of the 2012/13 tax year. By doing so, would this eat into my 2013/14 ISA allowance or would this still be intact?

badger09

hufc2002 wrote: »

Evening all

Any advice would be warmly welcomed.

OK I'll have a go, but innovate will probably be quicker at typing

hufc2002 wrote: »

Following Martin Lewis' programme on Friday, I opened us both another ISA each at the 11th hour of the 2012/13 tax year and deposited £2500 into mine and just £1 in my wife's as we don't currently have any other savings. Both ISAs are Lloyds TSB as that is who we bank with and the rate is only 1.45% but understand that it was more crucial just to have an ISA in the 2012/13 which I can't really get my head around.

The point I'm sure Martin was making, is that the annual ISA allowance is 'use it or lose it'. You can save a certain amount each year tax free. If you don't save that amount, for whatever reason, you've 'lost' the opportunity to save that amount tax free because you can't carry forward unused ISA allowances from one year to the next.

By paying in £2500, you've used £2500 of your 2012/13 allowance and as long as that £2500 stays within an ISA, it will be tax free -so a good move :T

There wasn't really much point in paying £1 into your wife's ISA though:(

hufc2002 wrote: »

Both ISAs are Lloyds TSB as that is who we bank with and the rate is only 1.45% but understand that it was more crucial just to have an ISA in the 2012/13 which I can't really get my head around.

My first question is what shall I do with the new £2500 that I have just put into that ISA?

If I transfer it elsewhere to a better rate i.e. Santander who are offering 2.5%, by opening that ISA with Santander does that become my 2013/14 ISA? and what happens to the ISA that I have literally just opened with Lloyds?

You can certainly do better than £1.45% at Lloyds.

Have a look at Kazza's thread - 1st post only as its kept up to date.
https://forums.moneysavingexpert.com/discussion/401374

The Leeds Online Bonus ISA might be a good home for your £2500. Whatever you decide, make sure you use the new provider's transfer process - don't try to do it yourself.

If you have any money to save this year, you could either open a new ISA or pay into the Leeds (if that's the one you chose for your xfer). I think you've missed the boat for the Santander 2.5%, the rate is apparently dropping to 2% tomorrow


Because £2500 was paid in in 2012/13 it has no effect on your 2013/14 allowance - even if it is transferred

hufc2002 wrote: »

Am I worthwhile transferring my wife's first ISA with the rate reducing to 2.4%? If so, where to? I don't necessarily need access to this money either. If I do transfer it can I transfer the whole amount (currently £5542)

As far as your wife's ISAs are concerned, I would think about having them both transferred (yes, even the £1 ) into something like the Leeds mentioned above. That way, if your wife has any more to save, she can add to it, and if she doesn't, she'll still get 2.55% on her £5432 + interest. She'll need to complete 2 transfer forms if that's what she decides to do.

You'll both need to switch again when any bonus period ends.

Phew

hufc2002

Thanks for this badger09.

I think I now understand that because the £2500 was put into an ISA in 2012/13, I have a right to transfer it to a better rate but still have my whole 2013/14 allowance in tact in case I have a windfall this tax year.

Please correct me if I am wrong.

Santander is still showing as 2.5%, too late to apply right at this minute?

innovate

hufc2002 wrote: »

Santander is still showing as 2.5%, too late to apply right at this minute?

Doesn't appear to be, but might be in about an hour and ten minutes. Still says 2.5% on the website right now. May be they keep the 2.5% for one more day

hufc2002

Currently applying for the Santander 2.5% ISA online as I want to transfer my £2500 that I have just put into my Lloyds 2012/13 ISA on Friday night.

On the declaration page it states:

'I apply to subscribe for a Cash ISA for the tax year 2013-2014 and each subsequent year until further notice. (This doesn't commit you to paying in every year but ensures that if you do, we won't need to ask you to sign another form).'

I thought by transferring a previous tax years ISA this would mean that I am still entitled to my full allowance for the 2013/14 tax year?

Help, confused agin.

debralee_2

Transferring a previous years ISA does not count as new money so yes you will still have your 2013/14 allowance.

dingdong11

A lady at Coventry Building Society told me this morning that HMRC will hold details of my application and if I apply again, they will have two records, so I must inform them that one is cancelled.
I don't want to apply for another and end up in trouble.

innovate

dingdong11 wrote: »

A lady at Coventry Building Society told me this morning that HMRC will hold details of my application and if I apply again, they will have two records, so I must inform them that one is cancelled.
I don't want to apply for another and end up in trouble.

The HMRC will receive data about everybody's ISA from the ISA provider. Individuals do not have to inform the HMRC. The HMRC do not have any processes to take the information from the public.

You should ask that Coventry lady to point you at the HMRC website that says individuals must tell the HMRC anything about transfers or opening more than one ISA. Or perhaps she can show you where it says so in the Coventry's guide to ISAs. She will fail on both accounts.