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MSE News Comment - Martin Lewis: Will you really gain from the new NISAs? - Page 5

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MSE News Comment - Martin Lewis: Will you really gain from the new NISAs?

edited 19 March 2014 at 6:17PM in ISAs & Tax-free Savings
62 replies 11.3K views
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  • Gizmo247Gizmo247 Forumite
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    For myself, I see these changes to the ISA rules as a real game changer because it changes "Flexibility & Churn".

    This now means I can feel comfortable about dumping my £11,000+ ISA into my mortgage to finally achieve full offset because I know that the change can be reversed.

    Not only that but I can then use the increased allowance to run an ISA in the same way as any easy access saving account. With the increased allowance, I can save, withdraw to upgrade the bathroom, save again, withdraw to upgrade the kitchen, dabble in shares. So I can still aim towards long-term saving without having to keep separate short-term saving pot too.

    The only fly in the ointment is likely to be restrictive transfer policies but this may become more free with new composite NISA products appearing on the market and the addition of partial transfers between Cash ISAs and S&S ISAS.
    MFiT-T3 #149: {Q4/14} (£46,447)-->(£0) ~ +£46,447=100%
    Mortgage Free: 1st October 2014 :j
  • edited 22 March 2014 at 3:46PM
    RobStaffsRobStaffs Forumite
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    edited 22 March 2014 at 3:46PM
    Apologies if this already been covered .If I want to put a lump sum into a fixed ISA on 6th April what will happen when the NISA starts up? I assume as I have already fixed so the option is closed with my existing ISA provider. The alternative is to open a easy access ISA at very low rate. Is this not just an opportunity for financial institutions to get money on the chaps for a few months?

    EDIT: Think I may have worked this out. Is the NISA a completely new product that will be offered at their own set of interest rates?
  • Archi_BaldArchi_Bald Forumite
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    No, the NISA is not a completely new product. You still can only deposit new money into one cash ISA per financial year. If you deposit into anything between April 6 and July 1, you have started your ISA for the year. This will automatically become your NISA on July 1.

    If you choose a fixed rate ISA, you may not be able to deposit any more into it come July. It all depends on what your provider allows. Skipton, for instance, have already announced they will allow further deposits. Shame their rates are pants. Other providers might do similar. There are also providers with fixed rate ISAs that have always allowed multiple deposits (Lloyds, TSB, KRBS, I think).

    If you choose an ISA that allows multiple deposits, you can just continue to make deposits up to the allowance come July.

    There is generally no rush throwing your money into a cash ISA before April 5 2015. You will almost certainly get better interest in current account until then, and you will be able to use your 2014-15 allowance until April 5 2015.
  • RobStaffsRobStaffs Forumite
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    thanks for that. I see your point. My wife doesn't work so I could deposit the funds in her savings account as she pays no tax on interest. In terms of transferring ISA's from previous years is this just looking at the most competitive rates around or best waiting?
  • ffacoffipawbffacoffipawb Forumite
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    mikemoate wrote: »
    Typical tory con!! Who will derive any benefit from this? Given the paltry rates on cash isa's at the moment, only those paying 40% tax. Tory friends!!!



    ... says a dumb financially illiterate Labour numpty.
    Retired Cymro

    🏴󠁧󠁢󠁷󠁬󠁳󠁿 Cymru am Byth 🏴󠁧󠁢󠁷󠁬󠁳󠁿
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  • FrogletinaFrogletina Forumite
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    mazybel wrote: »
    Am confused now .?? I earn £22000 approx. have £5350 ISA with Santander and £5750 with Coventry. Should i just put it in saving a/c instead ??

    There are several things to take into consideration.

    If you are on fixed rate ISAs then you will face a penalty for withdrawing the money early, even if it is allowed.

    If you can find a savings or current account which pays more interest after tax than your current ISAs then you could consider withdrawing the money from one or both of your ISAs and putting it into one of these. However, some of these accounts need regular monthly deposits and the interest rates on them could drop.

    ISAs often have higher interest rates for new money only, so if you haven't closed your accounts you could withdraw enough from one ISA to fund a 2014 ISA in April if the rates are better. Alternatively in July when the 2014 NISAs comes out, if there is an account which pays more for new money than transferred money, you could close both ISAs and open a NISA for 2014

    Usually the rule is that you never close an ISA, only transfer, but with the new £15,000 limit it makes sense to move less than that into cash if you can get more interest even on a taxable account and open a NISA only if the interest rates rise (unless you have more money you want to deposit during the same tax year into an NISA which would take you over £15000)

    Remember, only one new ISA / NISA can be opened in a single tax year, but multiple ones can be opened for transferred money from previous years ISA holdings.
    Not Rachmaninov
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  • RobStaffsRobStaffs Forumite
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    Frogletina wrote: »
    There are several things to take into consideration.

    If you are on fixed rate ISAs then you will face a penalty for withdrawing the money early, even if it is allowed.

    If you can find a savings or current account which pays more interest after tax than your current ISAs then you could consider withdrawing the money from one or both of your ISAs and putting it into one of these. However, some of these accounts need regular monthly deposits and the interest rates on them could drop.

    ISAs often have higher interest rates for new money only, so if you haven't closed your accounts you could withdraw enough from one ISA to fund a 2014 ISA in April if the rates are better. Alternatively in July when the 2014 NISAs comes out, if there is an account which pays more for new money than transferred money, you could close both ISAs and open a NISA for 2014

    Usually the rule is that you never close an ISA, only transfer, but with the new £15,000 limit it makes sense to move less than that into cash if you can get more interest even on a taxable account and open a NISA only if the interest rates rise (unless you have more money you want to deposit during the same tax year into an NISA which would take you over £15000)

    Remember, only one new ISA / NISA can be opened in a single tax year, but multiple ones can be opened for transferred money from previous years ISA holdings.

    thats interesting. So if you have £50k in a maturing ISA you can transfer into 5 ISA's at £10k each? I suppose this would be useful if your ISA is approaching the £85k threshold?
  • FrogletinaFrogletina Forumite
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    RobStaffs wrote: »
    thats interesting. So if you have £50k in a maturing ISA you can transfer into 5 ISA's at £10k each? I suppose this would be useful if your ISA is approaching the £85k threshold?

    Yes, you can do that.

    You might want to put some ISA money on instant access, and others fixed at various lengths.


    I have 4 current ISAs

    A 2 year fixed ISA (4.1%) which matures in June this year which contains ISAs from three different years, not consecutive - the first ever ISA I took out was a fixed one so I had to take out another one the following year as I could not add to the first one.

    A 2 year fixed ISA (4.1%) which matures in July and was once a Tessa

    A 2 year fixed ISA (3%) which matures next year which holds two non consecutive years ISAs

    A 3 year ISA (2.5%) which matures in 2016 which came from a previous 3 year ISA - I originally split this between 2 ISAs - one fixed and one instant access (which I closed and transferred the proceeds to my Lloyds Vantage accounts as the interest was higher).

    I have had ISAs with the following banks/building societies - currently I am only with two but that could easily change.

    The Coventry BS
    Bradford and Bingley
    Alliance and Leicester
    Santander
    Halifax
    Cheltenham and Gloucester
    Nationwide
    Not Rachmaninov
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  • The ISA news doesn't really please me at all. I was impressed at first at the huge rise, but then I realised the rates on ISAs are laughable.

    I get at the very least twice as much lending on P2P sites than I do from my ISA. On that note, though, very pleased to see the government will be treating P2P lending as tax free. Need to go read a bit more about that to fully understand how that'll work, though.

    I'm still living with parents at the moment, saving for a mortgage, so maximising my interest returns NOW is what is important to me (for those with longer term saving interests, maybe your best bet is to take full advantage of the new tax free wrapper size, in anticipation of future transfer-in rates).

    But for those interested in getting a worthwhile rate on a shorter term, I've not yet found a more reliable and easy method than P2P lending. S&S rates but fees only if you get a return.
  • Archi_BaldArchi_Bald Forumite
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    deed02392 wrote: »
    On that note, though, very pleased to see the government will be treating P2P lending as tax free. Need to go read a bit more about that to fully understand how that'll work, though.
    Nothing much to read about this yet since it isn't yet in consultation stage and won't be implemented for a long time. The budget report has made no provision for it before 2017.

    deed02392 wrote: »
    But for those interested in getting a worthwhile rate on a shorter term, I've not yet found a more reliable and easy method than P2P lending.
    for most people it will be easier to just use multiple current accounts for short term savings. Until very recently, you could stick some £90K into such accounts, more than enough for most people saving up for a mortgage. No risk of defaults, instant access to money, and decent interest, if perhaps marginally less than what can nowadays be achieved in P2P after all costs.
    deed02392 wrote: »
    S&S rates but fees only if you get a return.
    what are S&S rates?
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