Tell us you cash ISA questions

Maynardkj

Hi

Being new to ISA's what happens to a 1 year ISA at maturity. My understanding is that depending on the provider they can place it in a lower interest account or give you the opportunity to place it in a new ISA with a defined suitable rate that does not affect your yearly allowance because its an existing ISA. However if you had 20K in the ISA from its original conception at maturity you get the interest which then takes that ISA total to over 20K by several hundred pounds how can that be reinvested each year getting larger and larger and you can still start a new ISA with your new allowance each year.

eskbanker

Maynardkj said:

Being new to ISA's what happens to a 1 year ISA at maturity. My understanding is that depending on the provider they can place it in a lower interest account or give you the opportunity to place it in a new ISA with a defined suitable rate that does not affect your yearly allowance because its an existing ISA. However if you had 20K in the ISA from its original conception at maturity you get the interest which then takes that ISA total to over 20K by several hundred pounds how can that be reinvested each year getting larger and larger and you can still start a new ISA with your new allowance each year.

Providers will often write to account holders of maturing ISAs to spell out the options, and these should be documented in the product terms too.

There's no issue with the value exceeding £20K, as the £20K limit only applies to new contributions each tax year, so many have accumulated substantial ISA pots of hundreds of thousands....

PlatinumChaos

Forgive me, I'm still trying to get my head round ISAs. Last tax year, I put the max. £20K into a fixed-rate cash ISA with Charter, which is due to mature on 3rd April. Last Friday, I opened a cash ISA with Leeds BS but haven't paid anything in yet (as I'm still waiting for my activation code). I'm wanting to put the max £20K in again. Am I right in thinking that this week I can put my "new" £20K into the Leeds, and then when the Charter matures in early April, I can send a form to the Leeds asking them to request my £20K (plus interest) from Charter and add it to the "new" funds in the Leeds? Or might Charter ask me if I want to have it paid into another provider's ISA (i.e. the Leeds)? And would I then earn interest on the £40K (plus the Charter interest) without paying any tax on any of it? Or have I completely misunderstood things? Thanks

masonic

PlatinumChaos said:

Forgive me, I'm still trying to get my head round ISAs. Last tax year, I put the max. £20K into a fixed-rate cash ISA with Charter, which is due to mature on 3rd April. Last Friday, I opened a cash ISA with Leeds BS but haven't paid anything in yet (as I'm still waiting for my activation code). I'm wanting to put the max £20K in again. Am I right in thinking that this week I can put my "new" £20K into the Leeds, and then when the Charter matures in early April, I can send a form to the Leeds asking them to request my £20K (plus interest) from Charter and add it to the "new" funds in the Leeds? Or might Charter ask me if I want to have it paid into another provider's ISA (i.e. the Leeds)? And would I then earn interest on the £40K (plus the Charter interest) without paying any tax on any of it? Or have I completely misunderstood things? Thanks

That is all correct, except that Charter probably won't ask you to have it paid out to another account, as ISA transfers have to be managed from the receiving side.

PlatinumChaos

@masonic Phew! Thanks for confirming that.

Maynardkj

eskbanker said:

Maynardkj said:

Being new to ISA's what happens to a 1 year ISA at maturity. My understanding is that depending on the provider they can place it in a lower interest account or give you the opportunity to place it in a new ISA with a defined suitable rate that does not affect your yearly allowance because its an existing ISA. However if you had 20K in the ISA from its original conception at maturity you get the interest which then takes that ISA total to over 20K by several hundred pounds how can that be reinvested each year getting larger and larger and you can still start a new ISA with your new allowance each year.

Providers will often write to account holders of maturing ISAs to spell out the options, and these should be documented in the product terms too.

There's no issue with the value exceeding £20K, as the £20K limit only applies to new contributions each tax year, so many have accumulated substantial ISA pots of hundreds of thousands....

Thank you, so basically its only new money ISA that are restricted to the 20K existing ISA can be transfered to other ISA each Maturity year.

eskbanker

Maynardkj said:

eskbanker said:

Maynardkj said:

Being new to ISA's what happens to a 1 year ISA at maturity. My understanding is that depending on the provider they can place it in a lower interest account or give you the opportunity to place it in a new ISA with a defined suitable rate that does not affect your yearly allowance because its an existing ISA. However if you had 20K in the ISA from its original conception at maturity you get the interest which then takes that ISA total to over 20K by several hundred pounds how can that be reinvested each year getting larger and larger and you can still start a new ISA with your new allowance each year.

Providers will often write to account holders of maturing ISAs to spell out the options, and these should be documented in the product terms too.

There's no issue with the value exceeding £20K, as the £20K limit only applies to new contributions each tax year, so many have accumulated substantial ISA pots of hundreds of thousands....

Thank you, so basically its only new money ISA that are restricted to the 20K existing ISA can be transfered to other ISA each Maturity year.

Not sure if your paraphrasing captures it, but, to clarify, there isn't really a concept of separating "new money ISA" and "existing ISA" as such, in that you can have all your ISA money in the one ISA (where product terms permit), rather than having to split old and new money up, if that's what you were implying, i.e. the £20K limit on aggregate annual contributions to ISAs doesn't signify that current year money needs to be ring-fenced away from prior year money....

superdaddyc

I have a stocks and shares (S&S) ISA (had for around 20+ years) and a cash ISa (fixed for 12 months) Id like to move my which I'd like to move my S&S ISA to a cash ISA but I have no idea how to do it or if it's possible to do so now I have a cash ISA. I don't like the way the S&S fluctuates and as I'm getting on I'd like more stability.
If I move do I have to move my S&S to the cash ISA and would this push me over the annual limit or does the movement of a current ISA have no bearing on the ISA limit? 

gravel_2

superdaddyc said:

I have a stocks and shares (S&S) ISA (had for around 20+ years) and a cash ISa (fixed for 12 months) Id like to move my which I'd like to move my S&S ISA to a cash ISA but I have no idea how to do it or if it's possible to do so now I have a cash ISA. I don't like the way the S&S fluctuates and as I'm getting on I'd like more stability.
If I move do I have to move my S&S to the cash ISA and would this push me over the annual limit or does the movement of a current ISA have no bearing on the ISA limit? 

To move an ISA you instruct the receiving bank/provider to make the request and they will handle it for you. Whatever you do - do not manually withdraw the cash from S&S.

This has no bearing on your annual allowance.

XRocker

Hi
I have something which caught me out recently.
I have a current account which paid interest and a savings account which paid interest.
I received a letter from HMRC that said I had paid too little tax.
Their calculation showed that I had gone over my personal savings allowance.
I had thought that the personal savings allowance only applied to savings accounts.
But I was wrong.
Has anybody else been caught out this?
Thanks.