contributing to ISA vs having ISA

Estelle77

Hi,

I am a bit confused about what the wording exactly means: 'contributing to ISA'. I know I cannot contribute to two ISA accounts in one given year, i.e. transfer money into it. However, how is it taken when I have one old ISA, dormant, which only has the money there and earns interest each year and if I wanted to open another one where I would regularly contribute? Can I have both? The first one is just a cash ISA account, the other one I would like to open the new one with the government contributing to new property buyers.

Can I have both at the same time?
Thanks.

bigadaj

Each years isa contribution can be held separately, and you can then transfer them or retain them, or combine them.

So if you have a cash isa for last tax year, you can open a help to buy Isa this year with a separate company with no problem.

For most people it's not worth holding a cash isa, the money is better in interest paying current accounts even after you have paid tax on it.

jimjames

Estelle77 wrote: »

Can I have both at the same time?
Thanks.

You can but why would you want to? Presumably your old ISA has quite a bad rate now? The 4% for HTB is definitely worth it if you qualify but most other cash ISAs are such poor rates that other accounts are far better places to store savings

Eco_Miser

Estelle77 wrote: »

I know I cannot contribute to two ISA accounts in one given year, i.e. transfer money into it.

Yes you're confused.
You can only subscribe to one cash ISA per year. This means add new money.
You are allowed to transfer existing balances from previous years' ISAs into a new or existing ISA, which may, or may not, be the one you're subscribing to. (Transfers subject to the conditions of the receiving ISA allowing transfers in.)

However, apart from HTB ISAs, and a few old FRISAs still paying good rates, cash ISAs are not worthwhile for the vast majority of savers. Current accounts pay more, even after tax (and from April, there won't be any tax for many of us).

Estelle77

Thanks guys.

Just to put some things rigth: I have already topped the limit for the best paying current account so I do not get more. I do not see the need to open another and another one and to juggle with regular monthly income into them (if that is allowed). My old ISA account gives me 2% on what I have, but I cannot add any more funds. And I plan to buy a property this year so I thought I would benefit from those up to £3000 given by the government. The only sorry for me is that I will not have enough time to have a full benefit of this new ISA since there are limits to monthly contributions.

Thanks again.

bowlhead99

Makes sense to open up the HTB ISA and get the free money.

As you say, you won't get close to the maximum - even putting in money from now to December the bonus will be less than £1000. Still, on the bright side you can already afford a house this year so no real need for a £3000 taxpayer handout to help you spend more and push the prices up higher for everyone else

Estelle77

I am also a taxpayer and I contributed quite enough for years, never took any benefits. Just saying.

Estelle77

I have another question. On MSE it says (I am not allowed to post links, shame):

"Yet there is a way round this. Five providers allow ‘split ISAs’ – here they manipulate the rules to put the Help to Buy ISA and a cash ISA together in the same wrapper, effectively allowing you to have both. Remember, your maximum ISA allowance per tax year is £15,240 so your combined ISA savings (the amount you put into an ISA) can't exceed this."

Who are those providers? Is Virgin among them? They offer some featured ISA easy access account when I open the HTB ISA.

Thanks.

colsten

Virgin are offering a split ISA to their HTB ISA holders. Nationwide, Natwest, Aldermore, Newcastle BS are the others, and their rates are equally terrible.

jimjames

Estelle77 wrote: »

I am also a taxpayer and I contributed quite enough for years, never took any benefits. Just saying.

It's better for the government and for you if you use an account where you get a better return and also pay tax. By all means chase the tax saving but you'll still get a lower amount in interest.

Estelle77

colsten wrote: »

Virgin are offering a split ISA to their HTB ISA holders. Nationwide, Natwest, Aldermore, Newcastle BS are the others, and their rates are equally terrible.

So Halifax is not among them?
Halifax offers 4% (variable) on HTB ISA. Virgin only 3%, but with Virgin I can have that additional one with over 1.4% interest (poor, I know) for the amount not restricted to 200 a month. I guess I would not get any better than 4.4+% from elsewhere under these conditions I have with Virgin, would I?