Budget: £15000 ISA Limit from 01/07 for Cash OR S&S

bob_100

jimjames wrote: »

I'm really struggling to understand the point of this.

You put the money into a S&S ISA as cash where it will get 0% for 4 months. With the aim of then moving it to a cash ISA where it will get 1.5% or so, all to remain tax free.

Alternatively get 5% on it and pay some tax but still get a much higher rate.

It just seems to me that people are being blinded by it being tax free rather than maximising returns.

I'm thinking long term, when interest rates do pick up, could be as early as 18 months (next general election), but realistically in 3-5 years or even longer. I'm not thinking short term, but money that i will lock away. I want my Cash Isa maximised and if i can add an extra £5.760 i wouldn't mind having 0% until July 1st.

jimjames

bob_100 wrote: »

I'm thinking long term, when interest rates do pick up, could be as early as 18 months (next general election), but realistically in 3-5 years or even longer. I'm not thinking short term, but money that i will lock away. I want my Cash Isa maximised and if i can add an extra £5.760 i wouldn't mind having 0% until July 1st.

I can see that but in 5 years you could have put £75,000 (or £150,000 as couple) into ISAs with the new rules. Is it not better to maximise returns in the meantime and just move cash when the rates are better than outside an ISA. How many people need to hold more than £150,000 in cash long term?

bob_100

To be honest i was just thinking that i can maximise this years ISA and next years too. So if i act now i will have an extra £20k in ISAs this time next year rather than £15k (with just NISA). In terms of maximising my returns now the best savings account i can see open to all is 3% AER which is 2.4% after tax. I was thinking of going with Halifax 18 month fixed at 2% Tax free as there is hardly much difference. Thats why im thinking just to put it all in ISAs

OnlyMe_08

So if I'm reading this correctly, and with the ability to convert a S&S ISA into cash, would it be wise to consider getting one set up to use the remaining 13/14 allowance, then convert into cash later?

Or is it not as simply as that?

Pincher

All I want is an all-purpose ISA, that can hold cash as well as S&S.

When you see the credit crunch coming, you want to SELL equity, and get into the safe harbour of cash. What maniac dreamt up the rule where you can't hold cash in an S&S ISA long term?

I suspect a lot of people will rather have their money where they can get at and use it, than have it in a pension pot, where you may never
get it back, and get raped by high charges. The tax rebate comes with a lot of disincentives.

miller

For the people who have asked about opening a fixed rate cash ISA from April 6 then "topping up" afterwards e.g. by opening another fixed rate cash ISA (situation does not occur with instant access accounts as you just make a further deposit).

This situation has already happened in the distant past.

It may be possible to open another fixed rate cash ISA (or indeed an instant access account).

Nationwide, for example, [STRIKE]will[/STRIKE] did allow this if an existing fixed rate product was held when the Over 50's allowance was increased by £1,500 on 6 October 2009. Obviously the situation should be checked before subscribing in the 2014/2015 tax year.

An article at the time:
http://www.theguardian.com/money/2009/sep/26/isa-over-50-rule-change

Interesting related piece on "self-transfers":
http://www.thisismoney.co.uk/money/saving/article-1680556/Taxman-ignores-multiple-Isa-loophole.html

Jonbvn

Pincher wrote: »

When you see the credit crunch coming, you want to SELL equity, and get into the safe harbour of cash. What maniac dreamt up the rule where you can't hold cash in an S&S ISA long term?

The thing is very few people, if any saw the credit crunch coming.

miller

OnlyMe_08 wrote: »

So if I'm reading this correctly, and with the ability to convert a S&S ISA into cash, would it be wise to consider getting one set up to use the remaining 13/14 allowance, then convert into cash later?

Or is it not as simply as that?

I also had that thought initially when the announcement was made.

A poster above suggests Cavendish Online as it has no fees for this manoeuvre (a lot of S&S ISA's have exit/transfer fees), but it is unlikely you will be earning interest from nowish until your transfer out completes in/after July.

The current rules in force also state that the money must be awaiting an investment opportunity (although will be abolished in July). People doing this are going against the spirit of those rules if not the letter (in my opinion).

Not worth the hassle (again, in my opinion), but others may see this as a way of sheltering £5760 from tax for future years to come.

miller

"NISA" should be dropped as well. There is confusion already on this thread alone.

scubascuba3

I'm guessing the ISA cash rates will increase otherwise people will now switch their money in to stocks and shares. Another clever idea by the chancellor.