MSE News: Budget 2015: ISAs to become fully flexible with withdrawals allowed

Shedman

I can't believe how difficult it is to get information about who will either be a) providing Flexible ISAs and/or b) converting any of their ISAs to be flexible given that there must be lots of people looking, like me, to put this years ISA allowance in before end of tax year. I would prefer to open an ISA up with somebody that will be converting theirs into a flexible ISA rather than the hassle of putting it with a provider who isnt going or can't say if they are and then having to do transfers in the new tax year. (I know its not a huge hassle but even so its just more unnecessary steps as far as I am concerned .....)

So it seems like, at the moment, Virgin are the only one that allows transfers in of both current and prior year subscriptions and has come out and stated that their easy access ISA will convert on 6 April. Would have preferred NW as have other accounts there but have just called them and they can't state at this stage what they are going to be doing.

So if anybody else has anymore info on top of that which Gwapenut has posted it would be helpful (Surprised MSE Admin haven't started a list themselves by now).

jimjames

I can't see any benefit for any provider offering a flexible option. Why would they want the cost of admin of accounts that only have money in it for a few days per year. Will be interesting to see if many do offer it especially now the limit is £20k that is 10x the average savings amount.

Shedman

jimjames wrote: »

I can't see any benefit for any provider offering a flexible option. Why would they want the cost of admin of accounts that only have money in it for a few days per year. Will be interesting to see if many do offer it especially now the limit is £20k that is 10x the average savings amount.

As you say I can't see this being that widely available - only being offered by those providers that want to pick some new accounts in order to on-sell other products (and then relying on usual customer inertia of the majoriy to leave money in rather than using it wisely like MSE devotees...). Of course if they made the interest rate 4 or 5% :rotfl:then perhaps we would leave the money there.

colsten

ISAs are getting massively more complicated to understand, and there is no reasonable incentive for anyone to explain the various rules to anyone. My guess is that around 2029, the then Chancellor will announce a simplification of sorts of the rules. In the meantime, we will be left with

• cash ISAs, S&S ISAs, iffy ISAs, HTB ISAs, LISAs, each with their own rules
• a bunch of eligibles who don't understand any of the general ISA rules, and certainly not the rules that pertain to each of those ISAs
• a bunch of ISA providers whose personnel don't know their stuff when it comes to ISAs
• a complete lack of any official (i.e. government approved) site that has all the T&Cs, a FAQ, and a Helpline for ISA questions

badger09

colsten wrote: »

ISAs are getting massively more complicated to understand, and there is no reasonable incentive for anyone to explain the various rules to anyone. My guess is that around 2029, the then Chancellor will announce a simplification of sorts of the rules. In the meantime, we will be left with

• cash ISAs, S&S ISAs, iffy ISAs, HTB ISAs, LISAs, each with their own rules
• a bunch of eligibles who don't understand any of the general ISA rules, and certainly not the rules that pertain to each of those ISAs
• a bunch of ISA providers whose personnel don't know their stuff when it comes to ISAs
• a complete lack of any official (i.e. government approved) site that has all the T&Cs, a FAQ, and a Helpline for ISA questions

I used to consider myself competent to answer almost any ISA question correctly:cool:.

Having moved fairly rapidly from Unconscious Competence to Conscious Incompetence, I've pretty much given up:(

Hopefully some others will follow suit:p

Plus

Halifax say they will allow it on 'some of our cash ISAs': Instant ISA Saver, ISA Saver Variable, Variable ISA Saver and ISA Saver Online.

jamesd

masonic wrote: »

The statement from the October 2015 policy paper that "it will also be possible for them to subscribe to more than one cash and one stocks and shares ISA in a year" cannot be true if "replacement subscriptions do not count as subscriptions for the purpose of determining whether the investor has subscribed to more than one ISA of the same type" as stated in the more recent document.

Consider:

1. Cash ISA A subscribe 1000 then use flexible withdrawing to withdraw say 900.
2. Transfer ISA A balance to cash ISA B. The unused part of the annual allowance is also transferred to B. Subscribe 500 to B.
3. Flexibly replace the 900 withdrawn from A.

You now have two ISAs of the same type that both have current year money in them and have not breached the regulations.

jamesd

jimjames wrote: »

If it's in the ISA regulations then all providers will have to allow it I'd expect

Providers are allowed to offer the flexible features or some part of them but they are not forced to. When it comes to past year money MSE sought clarification from HMRC and that was their response.

masonic

jamesd wrote: »

Consider:

1. Cash ISA A subscribe 1000 then use flexible withdrawing to withdraw say 900.
2. Transfer ISA A balance to cash ISA B. The unused part of the annual allowance is also transferred to B. Subscribe 500 to B.
3. Flexibly replace the 900 withdrawn from A.

You now have two ISAs of the same type that both have current year money in them and have not breached the regulations.

This does breach the regulations as I understand them, because when you transferred ISA A to ISA B, in effect the current years subscriptions were not transferred in full.

Money flexibly withdrawn is disregarded in an ISA transfer (see example in clause 6.83), so when cash ISA A is transferred to cash ISA B, it is reported as containing ‘net’ current year subscriptions of £100. Manager A cannot receive any current year replacement subscriptions once the current year subscriptions have been transferred. Manager B can receive subscriptions up to the annual allowance less the £100 net subscriptions received.

masonic

jamesd wrote: »

Providers are allowed to offer the flexible features or some part of them but they are not forced to. When it comes to past year money MSE sought clarification from HMRC and that was their response.

There is no need to rely on the information second hand from MSE, here it is in black and white direct from HMRC.