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

masonic

ceredigion wrote: »

As you can see it is vary possible to open more than one cash ISA each year.

And indeed pay into more than one cash ISA each year under certain circumstances.

bowlhead99

masonic wrote: »

usermdc wrote: »

Separately, whilst most articles indicate that you can only open one Cash ISA each year, one leading provider has advised me that I can open a 2nd with them this year since the rule applies to providers rather than ISAs. Which is correct?

Your ISA provider is correct. They can report all of your ISA accounts held with them as being a single ISA.

They are (almost) both correct (and Masonic is correct).

- You can only have one ISA containing current year money.

- The rule does not 'apply to providers rather than ISAs'. The rule applies to ISAs.

- However, some providers like Nationwide and others will report the amounts you hold as being one single ISA so that you can be more flexible with how you use their accounts. There are several building societies that allow this, plus M&S. Many banks don't do this because it's more hassle and less profitable.

- So, this doesn't mean there is some new rule that says 'rule applies to providers rather than ISAs' and you would automatically be able to split your current year allowance between two different ISAs at, say, Barclays. The rule applies to ISAs. Just that some providers structure their affairs in a way that lets you split your current year allowance into more than one chunk, as long as it's all with them, and they'll call it just one ISA for tax reporting.

As ceredigion says, this rule described above, about not being able to open more than one account in a year, is about funding your current year subscription. The proceeds of previous years subscriptions can be carved up any way you like, subject to rules on transfers than individual operators might impose. And you can open up as many accounts in the current year as you like, as long as you are not going to actually be funding them at the same time and you transfer all the current year money around the place so that it stays together.

Basically all current year cash ISA money must be kept 'together', but some providers might have a looser definition of 'together' which allows for you to split it between multiple ISA account types within their institution

AngryLouie

So Guys & Gals

Back to the topic in hand :-

ie. The "famous" quote from Budget 2015 page 58:

"1.225 The government will allow ISA savers to withdraw and replace money from their cash ISA without counting towards their annual ISA subscription limit for that year, as long as the repayment is made in the same tax year as the withdrawal. This will enable savers to access their ISA savings more flexibly without losing the benefits they have built up. These changes will be introduced in autumn 2015, following consultation with ISA providers.

I was expecting some fanfare by now and a 1st. or 5th. Oct. start but it's gone very quiet, even from Martin!; anyone got any news?

Sorry if I missed this somewhere else.

Thanks.

Archi_Bald

I seem to remember having seen somewhere that this change will not be active before the new tax year.

colsten

Making ISAs more flexible – March Budget 2015 announced that the government will change the ISA rules in the autumn to allow individuals to withdraw and replace money from their cash ISA in-year without this replacement counting towards their annual ISA subscription limit. This policy will also cover cash held in stocks and shares ISAs. These changes will commence from 6 April 2016.

https://www.gov.uk/government/publications/summer-budget-2015/summer-budget-2015

If you have a need for repeated depositing and withdrawing, are you sure a cash ISA is the best vehicle? Wouldn't an interest-paying current account pay you a lot more?

Ed-1

luckymannn wrote: »

I'm also struggling to find any new information on this.

The original news article on here says "The changes, which will come into effect from autumn 2015".

It's now Autumn, right?

See the draft 'Flexible ISA' regulations:

https://www.gov.uk/government/publications/technical-consultation-the-individual-savings-account-amendment-regulations-2016

Plus

Looks like the regulations have been confirmed:

The Individual Savings Account (Amendment) Regulations 2016

(but the parliamentary draftsmen are grumpy).

colsten

Plus wrote: »

Looks like the regulations have been confirmed:

The Individual Savings Account (Amendment) Regulations 2016

I translate this very roughly into:

With the exception of the HTB ISA (if you qualify for one), and whilst cash ISA interest rates are not at least 3% AER, do not ever put any money into an adult cash ISA until about 2 weeks before the end of a tax year unless you are 100% certain that

1. you do not need to withdraw any of it and
2. your cash savings exceed the annual ISA allowance (£15,240 for this year and next)

Put your money into interest-paying current accounts and regular savers instead. If you really have to put money into a normal cash ISA, do it after your cash has earned a decent rate of interest for most of the last tax year.

My guess is that, sadly, many more people will opt for the complexities of the flexible ISA, and the much lower interest rates attached to it.

masonic

It looks to me that for those people who do not wish to use other types of ISA they may...

At the earliest opportunity from 6th April of each tax year, withdraw all of their cash ISA subscriptions and place them into better paying taxable accounts

and

At the latest opportunity before 6th April the following year, replace the ISA subscriptions in order to preserve their accumulated allowance (leaving them there until the start of the new tax year when they can once again be removed).

colsten

masonic wrote: »

It looks to me that for those people who do not wish to use other types of ISA they may...

At the earliest opportunity from 6th April of each tax year, withdraw all of their cash ISA subscriptions and place them into better paying taxable accounts

You may have read something that I have overlooked, so please correct me if I have missed something. The way I interpret the law is that you can replace your current year's subscriptions, up to max the tax year's allowance. Thus playing about with previous years' subscriptions is not an option.