Empty NatWest ISA

siwatkins

Hi,

Opened an ISA for deposit savings with NatWest back in 2012. Once we bought the house, we withdrew deposit and it's sat almost empty since.

Fast forward to now. I now in a position following retirement from the Forces to need to open a new ISA somewhere else at a decent rate and deposit some of my pension lump sum.

Question: Should I just ignore my NatWest ISA, or move it somewhere else and open up a new ISA as well? (Assuming I had 30k I wanted to deposit in ISAs now). Ie, can I still use the old empty isa, if transferred elsewhere as an additional 15k tax free savings area as well as a new isa opened in this tax year?

I'm also using high interest current accounts where possible.

Grateful for any advice,

Simon

p00hsticks

siwatkins wrote: »

Ie, can I still use the old empty isa, if transferred elsewhere as an additional 15k tax free savings area as well as a new isa opened in this tax year?

The £15,240 allowance is a total per person for each year - not per ISA. So you'd be better off looking round for the best rate, and sticking the full allowance in that one.

kangoora

Married? noticed the word 'we'

If married, cash transfers between spouses are free of tax so your wife could also open an ISA in her name if you gave her £15k.

Of course, it's then 'her' money to do with as she see's fit - this may be OK (or not)

badger09

But cash ISA rates are dire at the moment, so unlikely to be the best place for your cash.

If you give a little more information, we might be able to suggest much more lucrative options

siwatkins

Hi thanks, so may as well just close the Natwest one then I guess.

Yes, we - and happy for my wife to have accounts in her name as well as we regard it as our money etc.

Yes the rates are dire - doing a combination of things - overpaying 2.39% 5 yr fix mortgage at maximum 10% a year, high interest current accounts, and wife has just opened a Santander 123 account, - she earns just 10.3k so believe she's exempt tax on interest on her account. Also have premium bonds - know the rates are rubbish, but keep emergency funds in there. We are within about 6 years of when we wish to retire, have no debt other than mortgage and I'm a higher rate taxpayer.

Thanks for any advice!

Simon

Archi_Bald

What are your respective pension arrangements?

NB. whether you close the Natwest ISA or not makes no material difference. It's probably just hassle getting them to close it, so for an easy life just leave it be.

siwatkins

Wife is a low earner and has recently started paying contributions via the Govt scheme.

I have a pretty good Forces pension (I'm 50, and that's in payment already). I have also started recently started work and am part of a University Super-Annuation Scheme to which I contribute 6.5% and my employer contributes 16% of earnings (and it's a salary sacrifice scheme). I have an option to make additional contributions via MPAVCs and understand there are tax advantages as a higher rate taxpayer. I believe I can take 100% of those MPAVC contributions on retirement as long as they form only 25% of my overall new pension pot. As I've only just started the job, I've not looked into this in more detail yet, but it seems an attractive way to save in the longer term, albeit with the loss of flexibility. I'm a little bit risk averse at this stage, given we aspire to retire in >5 <10 years and we have the need to use some of our savings over the coming 3 years, so I need to have a blended range of easy access and longer term savings. The MPAVC option looks to be the no brainer for the longer term given my potential offset of 40% tax!

Simon

xylophone

Had your wife considered a personal pension in addition to NEST?

siwatkins

No - she hasn't. I'm not sure we'd benefit that much in her case - she doesn't pay tax, so nothing to offset. We view all our income as joint (happily married for 30 years), so my thoughts are we'd be better increasing my contributions and saving 40% tax, and increasing my pension than hers, but I am happy to hear about any benefits in doing something for her if that were advantageous. We are both 50, so she'd only be looking at 6/7 years of contributions from now.

greenglide

she doesn't pay tax, so nothing to offset

But with a personal pension she would get the tax relief anyway - it is paid directly to the pension provider - there is no requirement to actual pay any tax (extremely odd, I know).

Since she will not be paying tax in retirement it really is a wonderful deal. Tax relief on the way in no tax on way out.

She can contribute up to the total of her earned income so this must include the NEST contributions and it is the gross value (including the tax relief) not the net value (the amount she actually pays).

siwatkins

Ok thanks - worth thinking about after I've figured out my max contribution to mpavcs as that gives me 40% on the way in, and 0% on the way out if I take as a lump sum and size it right