3.3% ISA ending. £13k in it. What best to do please?

Nick_C

Do you have a current mortgage? If so, what is the interest rate? Have you considered making a capital payment?

psychic_teabag

r_holmes22 wrote: »

cwal; unfortnately I have made deposits in the Santander ISA this tax year. Does this mean I can't deposit the remainder of this year's annual allowance elsewhere until April now?

Not in this case. cwal probably meant some other ISA.

When you transfer the ISA into which you have already subscribed, the destination becomes the one true ISA into which you can deposit. The best statement of the rule is "the current year's subscriptions must stay together". If you transfer, you must transfer all the current year's subscriptions, then continue to deposit in the new account, or you must leave them all behind, and continue to deposit to the original account. (Latter applies when you are doing a partial transfer out.)

r_holmes22

AndyPK: Perfect! That is very helpful. Thank you.

Nick_C: Yes, I have a mortgage with Santander at their current standard variable rate (4.74% I think). Am am not aware of an option for a capital payment. Does that mean paying off a chunk of my outstanding balance with the £13k? I will have to do some reading, but what are the basic implications please (if you don't mind)?

psychic teabag: So if I were to transfer the £13k currently with Santander (and into which I have already paid money in this financial year) I could then only make further payments to that new account this financial year? I couldn't transfer the lump sum to the new provider and also open a Big Home Saver ISA with Newcastle BS for the rest of this year's additional payments? This would make sense because otherwise there is no way for the powers that be to track that I am keeping within the annual allowance, right?

Finally, if I were to transfer the funds from the current Santander ISA to their 123 account, would I still have to ask them to do it (as I would if I were to transfer to another provider) or can I 'move' the £13k across myself? I guess 'transfer' is only required for ISA-ISA moves but moving from an ISA to a current account is effectively a 'withdrawal'. Would I then have to pay tax on the portion I have paid in this tax year?

AndyPK

no you don't have to pay tax on a withdraw.

psychic_teabag

Yes, you're right. If you've already contributed to the Santander ISA, and the Newcastle one does not accept transfers in, then you cannot open the Newcastle one (in the same name) this year. But if your wife hasn't already subscribed to an ISA this year, she could open the Newcastle one.

As you say, if you are moving the money to a 123 account, you're just withdrawing it from the ISA, so no need to involve the transfer process.

r_holmes22

Thank you. You have all been very helpful. I have hit the 'Thanks' button for each of you.

bigfreddiel

fiesta04 wrote: »

bearing in mind I may need to withdraw the lot at any given time?

bigfreddiel, your reply may not be the best help in this case.

F4

i missed that point,well if it was me i would still lock away a portion, say half for the next 10+ years, then when you're a higher rate tax payer bang the whole lot into a sipp and bag another 40% from hmg - sweet

fj

innovate

bigfreddiel wrote: »

i missed that point,well if it was me i would still lock away a portion, say half for the next 10+ years, then when you're a higher rate tax payer bang the whole lot into a sipp and bag another 40% from hmg - sweet

fj

But it isn't you (or me)....and the OP said " ........ I may need to withdraw the lot at any given time?......" - so locking away 50% for the next 10 years doesn't seem to be on the radar? Don't think we even know how old the OP is, so they may be they are 85 and locking anything away for 10 years might not be such a good suggestion, even if we ignored that they said what they said about potentially needing the money?

AndyPK

r_holmes22 wrote: »

I am reluctant to deposit in fixed term account because there is a high likelihood I will need to withdraw it over the next 24 months (we are looking to move home and our house is already on the market).

....................

robatwork

r_holmes22 wrote: »

Nick_C: Yes, I have a mortgage with Santander at their current standard variable rate (4.74% I think). Am am not aware of an option for a capital payment. Does that mean paying off a chunk of my outstanding balance with the £13k? I will have to do some reading, but what are the basic implications please (if you don't mind)?

You're paying interest at 4.74% on your mortgage (including that nominal 13k at the moment). If you pay off the 13k lump sum then you won't be paying interest on that 13k portion.

You would be hard pushed to make 4.74% on any 2 year investment at the moment - at least one that isn't daft.

So I would do the mortgage payment. There are other considerations, for example you may need some "rainy day" money to protect you if you lose your job, and you may take out a lower interest mortgage so the sums may be different.

Or you could look at offset mortgages......but you will have to RTFM on that.