Paid into 2 cash ISA's this year - what will happen?

sparkiemalarkie

Hi I have a cash ISA with Nationwide ( Web ISA issue 3) that I subscribed to last tax year.

I opened a regular saving ISA with Nationwide this tax year and have paid in £2700 over the past few months.

When the annual ISA contributions increased in July, I had a mad moment. I decided to put the balance of the £15000 in the Web ISA issue 3 and then transfer it across to the regular savers ISA monthly so that I could make the most of the interest rates.

So I have contributed to the Nationwide Regular Savers ISA and the Nationwide Web ISA issue 3 this Tax year. I have paid in the max £15000 split between the 2.

When I was paying in the money to the 2 accounts they seemed 'linked' as it told me exactly, on both accounts, how much annual subscription was left.

I have just phoned Nationwide and have been told that I am not allowed to do this, but she couldn't tell me what will happen to my savings.
What will happen now? Am I in trouble?

sparkie

jimjames

You're within the limit and I thought nw allowed this anyway. So should all be fine.

colsten

Nationwide do all people to pay into more than one of their cash ISAs in the same financial year.

Clause 3.ii if their general ISA T&Cs says:

You can split your cash ISA allowance between all or any of our cash ISA products, and /or any cash ISA provided by the former Portman Building Society

http://www.nationwide.co.uk/support/support-articles/terms-and-conditions/isa-general-terms-and-conditions

Whether you can transfer from the Web ISA to the Regular Saver ISA is a very different question, and that is probably what the Nationwide lady you spoke to meant. Transfers into the Regular Saver ISA are not allowed, so you have now used your ISA allowance for the year and you are unable to put any more money into the Regular Saver ISA.

Presumably the interest rate on the Web ISA is terrible. Your only ISA option for something better would be to look for an ISA (cash or S&S) with an other provider that allows transfers in. Otherwise it is a case of waiting until next April 6 to sort yourself out.

Shame you are where you are as you could probably have got 4 or 5% AER in interest paying current accounts, beating any cash ISA on the market. This might still be an option if you don't mind not to use your full ISA allowance this year.

sparkiemalarkie

jimjames wrote: »

You're within the limit and I thought nw allowed this anyway. So should all be fine.

colsten wrote: »

Nationwide do all people to pay into more than one of their cash ISAs in the same financial year.

Clause 3.ii if their general ISA T&Cs says


Whether you can transfer from the Web ISA to the Regular Saver ISA is a very different question, and that is probably what the Nationwide lady you spoke to meant. Transfers into the Regular Saver ISA are not allowed, so you have now used your ISA allowance for the year and you are unable to put any more money into the Regular Saver ISA.

Presumably the interest rate on the Web ISA is terrible. Your only ISA option for something better would be to look for an ISA (cash or S&S) with an other provider that allows transfers in. Otherwise it is a case of waiting until next April 6 to sort yourself out.

Shame you are where you are as you could probably have got 4 or 5% AER in interest paying current accounts, beating any cash ISA on the market. This might still be an option if you don't mind not to use your full ISA allowance this year.

Thank you so much!
I though that I was in trouble!

The lady from Nationwide clearly said that by paying into both ISA's I was contributing to 2, and that was not allowed.

I have transferred some money across - £10 for practice - so no great problems there.

At the moment the web ISA is at 2.25% , so not too bad.
I have already maxed out 4% and 5% accounts, but thank you for mentioning.

I haven't any Tesco accounts atm but have cash ready to go in there when I get round to it. (better sooner than later as these banks have a habit of limiting how many accounts you can have - I have 3 Santander 123 accounts now I believe that you are only allowed 1)

I have no idea what I was thinking when I 'hatched' this plan- I just carried on regardless without checking first....

thanks

sparkie

colsten

sparkiemalarkie wrote: »

The lady from Nationwide clearly said that by paying into both ISA's I was contributing to 2, and that was not allowed.

shocking staff training/knowledge, not uncommon.....that's why I usually prefer to consult T&Cs.

sparkiemalarkie wrote: »

I have transferred some money across - £10 for practice - so no great problems there.

They might let you get away with it, but then they might not. They had a complete loss of SOH when people made internal transfers into their first edition of the FlexClusive ISA. Mind you, the difference in interest rate was about 5 times the difference between your two, if you indeed get 2.25% AER (website is v confusing about the interest rates on this ISA http://www.nationwide.co.uk/support/support-articles/rates-fees-charges/savings-rates)

I have 3 Santander 123 accounts now I believe that you are only allowed 1)[/QUOTE]
Those were the days.....max now is 1 sole, one joint.

sparkiemalarkie

colsten wrote: »

shocking staff training/knowledge, not uncommon.....that's why I usually prefer to consult T&Cs.

They might let you get away with it, but then they might not. They had a complete loss of SOH when people made internal transfers into their first edition of the FlexClusive ISA. Mind you, the difference in interest rate was about 5 times the difference between your two, if you indeed get 2.25% AER (website is v confusing about the interest rates on this ISA

I have 3 Santander 123 accounts now I believe that you are only allowed 1)
Those were the days.....max now is 1 sole, one joint.

They had a complete loss of SOH what does this mean?


if you indeed get 2.25% AER - yes just checked Web ISA issue 3 £10,000+ not sure how long that interest rate will last for though. I've had this now for a couple of years, I think, and have been able to add to it.


sparkie

colsten

SOH = sense of humour

bri160356

colsten wrote: »

shocking staff training/knowledge, not uncommon.....that's why I usually prefer to consult T&Cs.

They might let you get away with it, but then they might not. They had a complete loss of SOH when people made internal transfers into their first edition of the FlexClusive ISA. Mind you, the difference in interest rate was about 5 times the difference between your two, if you indeed get 2.25% AER (website is v confusing about the interest rates on this ISA

I have 3 Santander 123 accounts now I believe that you are only allowed 1)

I‘ve read this thread interest; I thought I understood the cash ISA rules regarding the payments allowed into them, but having read the Nationwide Cash ISA general T’s&C’s, that have been quoted, there appears to be something of a conundrum.

I’ve had some lengthy discourse with Coventry B.Society very recently regarding this issue and I was told quite categorically that you can only ‘pay into’ one cash ISA account per tax year, whether that’s a newly opened account or an existing account from previous years. Even if you have two , or more, different cash ISA’s with the same provider you are only allowed to pay this years allowance (full or part) into one of them. It is actually illegal to pay into 2 separate cash ISA’s within the same tax year. I also spoke to HMRC who confirmed that the info furnished by the Coventry B.Society was indeed correct.

Once you pay into a particular cash ISA you are effectively barred from depositing any more of your £15k annual allowance into a different cash ISA account, no matter if the cash ISA’s are with the same Provider or separate Providers.


If, for example you’ve paid £2k this tax-year into an existing cash ISA account, you can, if you wish, ‘close and transfer’ that ISA to another cash ISA (rules permitting of course) and the remaining allowance of £13k is ‘transferred’ with it.

You are allowed to open one new cash ISA account per year, even if you have already paid into an existing (i.e. previous years) cash ISA this tax-year. But, if you have paid into an existing cash ISA this year the only way to make a deposit (using this years remaining allowance) into a newly opened cash ISA is to ‘transfer IN’ the cash ISA that you have already paid into this tax-year.

However, the Nationwide ‘cash ISA general terms and conditions’ appear to have turned everything on its head!

P.S. I’m no cash ISA expert by the way; I just thought I finally had a handle on the cash ISA rules, but now I’m as confused as I ever was!

Archi_Bald

You must not confuse Nationwide's management of your cash ISA with the HMRC rules for cash ISAs. Any provider can do what Nationwide does, and in fact one or two other Building Societies do. They manage your entire subscription with them as a single ISA subscription for the year, regardless of whether all the money sits in the same account or gets the same interest rate. There is nothing wrong or illegal about this.

You also have to distinguish between

1. opening and subscribing. You can open just as many cash ISAs as you like. It is only the subscription where you have to watch the rules
2. transferring ISAs and subscribing. Again, you can transfer as often as you please, T&Cs of your ISA allowing. If you transfer a current year subscription, you have to transfer all of that year's subscription. You do not "close and transfer" - you ask the new provider to make the transfer for you.
3. people who conclude that the ISA products of the company they work for are the law, and what the law actually is

It is actually very simple and this HMRC FAQ opens many questions http://www.hmrc.gov.uk/isa/faqs.htm

bri160356

Archi_Bald wrote: »

You must not confuse Nationwide's management of your cash ISA with the HMRC rules for cash ISAs. Any provider can do what Nationwide does, and in fact one or two other Building Societies do. They manage your entire subscription with them as a single ISA subscription for the year, regardless of whether all the money sits in the same account or gets the same interest rate. There is nothing wrong or illegal about this.

You also have to distinguish between

1. opening and subscribing. You can open just as many cash ISAs as you like. It is only the subscription where you have to watch the rules
2. transferring ISAs and subscribing. Again, you can transfer as often as you please, T&Cs of your ISA allowing. If you transfer a current year subscription, you have to transfer all of that year's subscription. You do not "close and transfer" - you ask the new provider to make the transfer for you.
3. people who conclude that the ISA products of the company they work for are the law, and what the law actually is

It is actually very simple and this HMRC FAQ opens many questions[/url]

That’s very interesting Archi.

When you say it’s ‘very simple’, well it may be for you my friend, as a seasoned contributor on this forum, but not for me I’m afraid. And neither is it for some of the staff at HMRC (Liverpool), Coventry B.Societys (so called!) investment experts, a Virgin Money help-desk expert and indeed the lady from Nationwide themselves who was referenced by the OP in his thread starter.

The only pertinent Q&A on the HMRC websites FAQ’s regarding the number of cash ISA’s is; quote:

Q. How many ISAs can I have?
A. There are limits on the number of ISA accounts you can subscribe to each tax year. You can only put money into one cash ISA and one stocks and shares ISA.

There doesn’t appear to be any mention about one provider being able to ‘group’ several different ISA subscriptions (to different accounts) and treat them as one single subscription......or does it??

One thing I thought was a little strange on the HMRC FAQs was that two separate questions;

Q. What if I pay into too many ISAs?
&
Q. What if I pay too much money into my ISAs?

Both had exactly the same answer!

A. If, by mistake, you put too much money into your ISAs the excess payments are invalid, and you are not entitled to any tax relief on income from investments purchased with the excess payments.
You should not try to correct this mistake yourself. Where appropriate, HMRC will contact you after the end of the year and tell you what action is necessary.


What constitutes “too many ISA’s ?; Virgin Money and Coventry B.Soc have one opinion whilst the Nationwide B.Soc (according to their T’s&C’s) has a completely different opinion.

However, if one sticks to the rules as stated in the Providers terms and conditions (whatever they say!) then I doubt the HMRC would hold anything against you;..........probably! :eek:

colsten

I think Archi is absolutely right, it is not complicated. Perhaps if you look at S&S ISAs, it will become clear that a single ISA provider can, perfectly legally, let you spread your allowance over several products.

In an S&S ISA, held with your chosen ISA platform, you could, in theory, buy tens of thousands of different shares and funds, all in the same year. In reality, people will usually just invest in a handful of funds and shares each year (their portfolio). But it is totally normal to hold more than just 1 fund or share. These S&S ISAs are the most popular because they offer the most flexibility.

There are also some packaged S&S ISAs, where you don't choose your own funds or shares, and instead just have the option of 1 fund. The Virgin S&S ISA is an example. These singleton S&S ISAs are generally bad performers and shunned by savvy investors.

The exact same principle applies to cash ISAs, and it is entirely down to the bank or building society whether they offer just 1, or several cash ISA accounts under the same ISA umbrella. They obviously can only offer their own savings accounts but they can of course offer several of them. Most of them only offer 1, or max 2 (a variable rate and a fixed rate one) each year, and most of them do not offer to manage more than one of their ISAs under the same umbrella. Nationwide do, and so do a couple of others that I can't remember now. It is all perfectly legal, regardless of what countless uninformed people in banks and building societies and even in the HMRC told you. It's also not generally much use to spread your ISA allowance across two or more savings accounts with the same ISA Manager - another reason why most of them don't even offer it.

The typical ISA saver won't need to know about all the theoretical possibilities. It is generally a lot easier if people just describe their circumstances and requirements, and ask the questions that they have about their own ISA. For most cash ISA investors, the simplest answer is that they can just put money into one ISA account, with one ISA provider. So what is your specific question?