Surprisingly confused by Martin

PawelK

Hello. I have been following the development of news about htb isa and listened to many programmes and read blogs of Martin, such as guides etc. However, I am either dumb or his explanations never went into enough detail. He kept saying that you cant have cash isa and htb isa opened in the same tax but you can have one from previous year. Yet, if you contributed to your cash isa this year, you wont be able to open htb now. I just read your new htb isa guide and step 7 is as below.

"You can't contribute to a Help to Buy ISA and a cash ISA in the same year

The rules are clear that you can’t open a cash ISA and a Help to Buy ISA open at the same time in the same tax year. Though nothing prevents you opening a Help to Buy ISA if you have cash ISAs from previous years, or a stocks & shares ISA from this year. So in most cases then it’s a straight choice – you can have one or the other."

While the heading says about contributing to an isa, the text below says about opening an isa. Surely, both things are not the same and this is where I get massively confused. I do have a cash isa that I opened few years ago but while I didnt open a new one this tax year, I have been contributing to it every month for the last few years.
So, can I go today and open htb isa or do I need to wait until April? And if I can, do I have to close my existing cash isa completely or can keep it open and just transfer £1,200 to htb isa but also keep saving into my old existing cash isa?

I wouldnt be surprised if there are more people like me not sure what they can and cant do.

By the way, perhaps someone knows any better returns and can advise? Obviously, htb isa comes first, then I have 20k in my cash isa and further 20k in my 123 savings account from santander. If i have to close down the cash isa, where would be best for me to invest the 20k balance?

Thanks.

Pawel

bsms1147

You can only contribute to one cash ISA per tax year. As you have been contributing to one this tax year, even if it was opened in a previous year, it becomes your cash ISA for this year.

Some providers will allow you to have a cash ISA and a HTB ISA under the same ISA 'umbrella' allowing you to contribute to both during one tax year. Check with your current provider to see if they are one of the few that do this.

Otherwise it is possible to close/transfer current year's subscriptions to another provider or remove them from the ISA wrapper entirely which would allow you to open a HTB ISA (if you are eligible), but someone better informed than me can explain that much better than I can.

Overall after a HTB ISA (which may or may not be the best option for you) best returns are generally found outside of ISAs. The Santander 123 can be easily beaten with a bit of work using multiple current accounts.

PawelK

Thansk bsms. I do realise there are better returns than 123 santander. However, they are usually cap monthly contributions to something like £200. Others have higher interest rates but only until certain, low threshold. One of them I am using is an hsbc customers, where you can save up to £250 per month but rate is 6%.

Yet, going back to htb isa, it looks like Martin's guidance on halifax might be best but only Nationwide, paying less interest, helps to split so I can keep my existing cash isa. Still need to work out if thats my best second choice (htb definitely is as I am an aspiring ftb) as some savings accounts might be better.

One thing that is on my mind is that I feel like I am being penalised for being such a good saver by not being able to open a htb now and rather wait until April. Not fair. :mad: