123 ISA Santander

sivs

Hello,

Please can you someone help? I've got a 123 ISA which pays 2.3% for 2 years. I am sure this wasn't mention when I opened this but received an email advising me that I'm unable to pay anymore into the ISA after 31st August.

My question is I've paid about 5k in so far which leaves another 10K left from allowance but will not be able to pay this before 31st August. What can I do to stop me losing this allowance?

Thanks,

Reaper

Except in very rare cases fixed rate, fixed term savings rate accounts only have a brief period at the start when you can put money in. Always assume that is the case unless it explicitly tells you otherwise. Santander are clear about it on their web site.
http://www.santander.co.uk/uk/isas/123-2-year-fixed-rate-isa/ (see the "Paying In to Your ISA" tab)

Deposit the 2014/15 allowance up to £15,000 until 31 August 2014. No additional deposits allowed after 31 August 2014

You could transfer your ISA to another provider but you will suffer 120 days interest penalty.

Alternatively open a stocks and shares ISA with another provider when you have the money as you are allowed one of each.

jimjames

sivs wrote: »

What can I do to stop me losing this allowance?

Thanks,

If you don't have the money to pay in, what is the problem with not using the allowance?

Can you not just pay into a new ISA next April? In the meantime you'll get way higher than 2.3% using current accounts.

sivs

Thanks for the replies, I must have missed it as i see it on there website now but when I opened by ISA back in March I don't remember seeing it.

Anyway will look into stocks and share isa or I will just take the hit and save in current account and pay the higher tax :-(

moneyfoolish

I did the same as yourself i.e. opened the account with £5000 but I had the extra £10,000 available so added it later. However, like yourself, I hadn't read the rules closely enough as I wanted to transfer one of my fixed rate ISAs which finishes on August 2nd only to find that although it's within their August 31st cutoff date, you can't transfer into it out side of a 14 day window from the initial opening!

colsten

sivs wrote: »

or I will just take the hit and save in current account and pay the higher tax :-(

Tax deduction from a 4 or 5% current account could still leave you with more interest than 2.3%. What tax band are you in? When do you need / plan to spend the money you had intended for the cash ISA?

colsten

The only fixed rate cash ISAs that I know of that allow deposits throughout the term is Lloyds and TSB. Not surprisingly, their rates aren't very good.

sivs

I'm in the higher 40% bracket, so if got 5% would come out with 3... Still better than the 2.3..

Thanks

colsten

Have you looked into making additional pension contributions / salary sacrifice? Could be highly attractive for a higher rate tax payer, and might even bring you back into basic rate territory.

sivs

Hi Colsten, that is a good point which I have neither thought about. I will have a chat with my FA and see if this will be benifical.

:-)