Tell us you cash ISA questions

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  • Archi_BaldArchi_Bald Forumite
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    It would make zero sense to use an ISA if you can only save a few hundred pounds before April. Have a look at interest paying current accounts instead as they will pay a lot more interest. Start with TSB Plus, perhaps.
  • dwp3dwp3 Forumite
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    Sorry if this has effectively been answered before but haven't seen the exact same question and want to be sure.

    I opened a Virgin cash ISA last autumn to transfer the whole of a previous Nationwide one. In April I added £5940 to it, and now want to use the additional allowance. I haven't opened a new ISA this year, only paid into an existing one. Does the fact that I've paid into Virgin this tax year mean I am stuck with them for the top-up ?

    I could get a better interest rate for the additional funds with Coventry or the Nationwide Flexclusive but if I can't open a new one with them I can't get round it by transferring because they don't allow transfers in. And it's hardly worth transferring to BM Savings for an additional 0.05% above the Virgin rate.

    Should I have held off putting anything in during April to keep my options open ?


  • Archi_BaldArchi_Bald Forumite
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    You can only pay new money into 1 cash ISA per tax year. You can also pay into an S&S ISA in the same tax year.

    You can transfer all of your current year's cash or S&S ISA deposits to other ISAs that accept transfers in.

    Cash ISAs with higher rates are typically only open to current year's new money.

    You can get better interest outside cash ISAs, and there might be some better ISAs that allow transfers in towards the end of the tax year. But then again, there might not be. Nobody has a crystal ball.
  • edited 15 July 2014 at 5:12PM
    warwicktigerwarwicktiger Forumite
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    edited 15 July 2014 at 5:12PM
    I paid £5000 into my ISA in mid April, when I was still living in the uk. I left England on 23 April and have lived in France ever since, where I intend to remain.

    A. Can I now top up my ISa to £15000, On the grounds that I lived in the UK for part of the current tax year?

    B. When I fill out my French tax return next year for Calendar 2014 will the French taxman acknowledge the tax free status of my ISA interest?
  • Archi_BaldArchi_Bald Forumite
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    I paid £5000 into my ISA in mid April, when I was still living in the uk. I left England on 23 April and have lived in France ever since, where I intend to remain.

    A. Can I now top up my ISa to £15000, On the grounds that I lived in the UK for part of the current tax year?

    B. When I fill out my French tax return next year for Calendar 2014 will the French taxman acknowledge the tax free status of my ISA interest?

    A. - doesn't sound as if you can. http://www.hmrc.gov.uk/isa/faqs.htm#14

    B. I doubt that the French (or any other country's) tax people care about the HMRC's generosity. The best you get under double taxation agreements is an assurance that you don't have to pay tax twice. The UK - France agreement is here: http://www.hmrc.gov.uk/taxtreaties/in-force/france.pdf
  • bowlhead99bowlhead99 Forumite
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    dwp3 wrote: »

    I opened a Virgin cash ISA last autumn to transfer the whole of a previous Nationwide one. In April I added £5940 to it, and now want to use the additional allowance. I haven't opened a new ISA this year, only paid into an existing one. Does the fact that I've paid into Virgin this tax year mean I am stuck with them for the top-up ?

    I could get a better interest rate for the additional funds with Coventry or the Nationwide Flexclusive but if I can't open a new one with them I can't get round it by transferring because they don't allow transfers in. And it's hardly worth transferring to BM Savings for an additional 0.05% above the Virgin rate.

    If you've paid into Virgin this year you will need to pay any further top-ups into Virgin, or transfer the current (or current-and-prior) Virgin money to some new place and top it up there. Current year money must stick together (unless you have part in a cash ISA and part in an investment / S&S one).

    You mention that Coventry don't allow transfers in. However, you may be misinterpreting the rules (depending which specific account you're looking at). For example on their '2.75% fixed to April 2018' account they say (my highlighting):

    If you have already subscribed to an ISA with us or another ISA Manager for the 2014/2015 tax year and you wish to transfer the subscription to this account, this can be arranged by contacting us.

    Please note that transfers of previous tax years' subscriptions and subscriptions in future tax years cannot be made into this account.
    So actually it would be valid to transfer over just that portion of your existing ISA that represents 2014/15 contributions into a new account with Coventry.

    Then HMRC would be happy (because all your subscriptions from the current tax year are together) and Coventry would be happy (because they're only willing to pay their top rate on one year's worth of money, they don't want someone bringing in prior year contributions of £50k+ into the account).

    Generally, even where you have an account with more than one year's contributions in it, ISA providers are still able to split them up to keep your current year stuff separate from your prior year stuff for recordkeeping process. HMRC would require them to keep those records in case there was ever a dispute about you having current year money in more than one place. So, it means you can usually request that only current year contributions or only prior year contributions are transferred out of the old ISA, when moving them around.

    Of course, if your ISA at Virgin is a long term fix rather than instant access, you may face an interest penalty if you try to take money out of it by means of withdrawal or transfer out. Potentially it will not be worth moving if the rate at the new place isn't significantly better. And with some tempting sounding rates, generally to get the better rates you have to take longer fixes which you might not want.
    Should I have held off putting anything in during April to keep my options open ?
    Depending on your personal circumstances, maybe. Lots of banks have high interest current accounts where you can earn 3% or 4% or 5% (taxed) on a good chunk of money and so diving for an ISA on the first day of a new year is not always a winner.

    But you never know on the first day of a new year whether a better product will come along in 3 months or 6 months. To be honest, with interest rates at all time lows and with the market known to be going through a shakeup on 1 July to allow new more flexible ISA products, I wouldn't have put money in a cash ISA in early April this year. But it's easy to sound like a know-it-all with hindsight ;)

    I likely won't use a cash ISA at all this year, and will max it on stocks and shares instead if I can afford to and the markets are still looking OK in another 6 months.
  • warwicktigerwarwicktiger Forumite
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    Archi_Bald wrote: »
    A. - doesn't sound as if you can. http://www.hmrc.gov.uk/isa/faqs.htm#14

    B. I doubt that the French (or any other country's) tax people care about the HMRC's generosity. The best you get under double taxation agreements is an assurance that you don't have to pay tax twice. The UK - France agreement is here: http://www.hmrc.gov.uk/taxtreaties/in-force/france.pdf

    Many thanks, as I thought.
  • dwp3dwp3 Forumite
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    Thanks a lot Archi Bald and bowlhead99, that's very helpful. I must say I didn't appreciate the subtleties of the Coventry terms and conditions, and when I went into a branch to ask they didn't mention a transfer of current year subscription as a possibility.

    I'll top-up into the Virgin ISA, then I'll consider a transfer later. However with all the talk of an earlier than expected rate rise I might hang on for a while and see if any better deals are offered.
  • Hi. I think I already know the answer to this question, I suppose I’m looking for conformation as it’s hard to find a simple yes or no answer to the question which is... I know that interest earned in a cash ISA (or NISA) is paid free of tax. Is it also the case that the interest earned (say 1000 pounds) does not count towards your annual tax allowance? This would then seem to make an ISA more attractive than just the interest rate as opposed to a normal savings account which may offer a better rate, but would count towards your earnings when filling out the dreaded self assessement tax form.
    Regards.
  • edited 16 July 2014 at 11:35AM
    bowlhead99bowlhead99 Forumite
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    edited 16 July 2014 at 11:35AM
    Interest, dividends and capital gains earned inside an ISA are effectively invisible to the UK taxman and do not have to be tracked or disclosed on self assessment tax forms.
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