MSE News: Budget 2015: Martin's reaction to the savings changes

Ed-1

Steve_xx wrote: »

That would be madness, since the amount transferred out on 5th April would lose its tax wrapper forever, and the amount put in on 6th April would inevitably become part of the current tax years ISA.

It's not money being transferred out on 5th April - it's money being transferred in.

If this new ISA withdrawal flexibility means that previous years ISA money can now be withdrawn and then redeposited again within the tax year without contributing to the ISA allowance again which the BBC has apparently had HMRC confirm then to keep the money's tax-free status and earn better rates of interest people can withdraw the money from ISAs on 6th April, spread it across better paying accounts and then redeposit it in ISAs again on 5th April the following year to keep the tax-free status going forward and then repeat the next day on 6th April until ISA rates beat other rates.

Archi_Bald

Herbalus wrote: »

You're on different wavelengths.

I think Castle meant you can achieve better interest rates outside of ISAs but these transfers mean you keep ISA protection for when ISA rates do go higher than the historical anomaly that is 5% etc in current accounts.

OK, that could make sense provided that the money had been taken out of an ISA at an earlier stage in the same financial year.

But this wasn't mentioned, that's why I didn't see the advantage. And we had more than one poster on the forum suggesting that putting money into an ISA for one day would yield a year's worth of interest.

treasures

I thought that these changes were not to take place until April 2016 - or have I got it wrong?

Ed-1

treasures wrote: »

I thought that these changes were not to take place until April 2016 - or have I got it wrong?

ISA changes (Help to Buy / flexibility) scheduled for Autumn this year.

Personal Savings Allowance planned for April 2016.

jamesd

Archi_Bald wrote: »

But this wasn't mentioned

Well, except in the fifth post in this topic and the first to mention this:

jamesd wrote: »

Withdraw £100,000 from your cash ISA on 6 April and deposit into a higher paying after tax set of savings and current accounts. On 5 April withdraw it from the other accounts and pay it back into the cash ISA. ... You just got the higher non-ISA interest rate without having your money moved outside the ISA tax wrapper permanently. It's potentially a big deal for interest rate competition if it's used a lot....

Perelandra

This also introduces the option for some interesting moves between ISAs and Offset mortgages, for people currently not wanting to save into ISAs (while paying off mortgage), but who may want to exceed £15k ISA savings later in their careers when they can afford it.

wolvoman

Perelandra wrote: »

This also introduces the option for some interesting moves between ISAs and Offset mortgages, for people currently not wanting to save into ISAs (while paying off mortgage), but who may want to exceed £15k ISA savings later in their careers when they can afford it.

Exactly this.

If your ISA interest rate is lower than your mortgage rate then this is an excellent way of boosting your income whilst maintaining the tax-free wrapper.

Unfortunately (well not really) my mortgage rate is much lower than most ISAs pay out.

jamesd

Perlandra, yes, it does. Very useful given the difference between mortgage and savings rates and the lack of widely available offset ISA accounts.