Mini-cash ISA wrapper vs wrapper of index linked NSI certs

ashm1

Hi,

Mini-cash ISA 3K per tax year, and index linked NSI certs 15K per issue with minimum 1yr holding.

Are the wrappers similar? (assuming the large deficits keep the NSI cert new issues going)

In an emergency could you drain a few years ISA cash subscriptions into index linked NSI certs with no tax effect?

jem16

The tax-free return on NS&I certificates is much lower than you will get from a cash ISA.

For example tax-free return on NS&I certificates is around 4.8% and NS&I direct ISA is 6.3%.

I'm not sure why you would want to drain a few years ISA cash subs?

ashm1

jem16 wrote: »

The tax-free return on NS&I certificates is much lower than you will get from a cash ISA.

For example tax-free return on NS&I certificates is around 4.8% and NS&I direct ISA is 6.3%.

I'm not sure why you would want to drain a few years ISA cash subs?

Sorry I meant in a Northern Rock situation as the UK economy slows where the ISA transfer process (I read on the forum Nationwide transfers took months) would cause you to lose the tax wrapper as you exit.

Has the compensation scheme been amended?

Presumably you'd lose the ISA wrapper under the compensation scheme.

masonic

ashm1 wrote: »

Sorry I meant in a Northern Rock situation as the UK economy slows where the ISA transfer process (I read on the forum Nationwide transfers took months) would cause you to lose the tax wrapper as you exit.

Following the ISA transfer process will never cause you to lose the tax free status of your funds. If you mean that (as happened in the Northern Rock fiasco) you withdraw your funds because you think the bank is in trouble, then yes, the money would lose it's tax free status.

Has the compensation scheme been amended?

Yes, the lower limit doesn't exist anymore. Now you have full protection on the first £35k of savings with a bank.

Presumably you'd lose the ISA wrapper under the compensation scheme.

Maybe, I don't know. Of course, it's possible that the government might remove the tax free status of ISAs in the future. If you are in the habit of weighing up unlikely scenarios, that's another one for you to consider.

ashm1

http://money.guardian.co.uk/news_/story/0,,2194024,00.html

No tax penalty for Northern Rock savers

[FONT=Geneva,Arial,sans-serif] Hilary Osborne
Thursday October 18, 2007


[/FONT] Customers who withdrew money from tax-free savings accounts held with Northern Rock in the aftermath of the bank's funding crisis were told today they could pay the money back in without losing their tax advantages.The rules on individual savings accounts (Isas) stipulate an annual limit on deposits, so a saver who has used up his or her allowance is not usually allowed to repay in money that has been withdrawn.

http://www.citywire.co.uk/News/NewsArticle.aspx?VersionID=97678



Good news for those who withdrew their ISA's. So better stick with the higher return ISA wrapper .

david78

According to the link, you can get a certificate from Northern Rock and use it to pay into an ISA elsewhere.

Mikeyorks

According to the Treasury .... there appears to be an existing dispensation where NRK customers who closed ISA accounts, after part contributing their £3k 2007-08 allowance, have been able to contribute the balance to another provider.

And that is before this dispensation was announced which effectively treats 'closure of ISA with NRK' >> 'reinput to NRK' / or / 'funds to other ISA provider' ...... as a transfer.

http://forums.moneysavingexpert.com/showthread.html?t=579050