ISA Advice sought.

[Deleted User]

Hi All, I recently upped my ISA stake in Virgin to the £85,000 protected limit, mistakenly thinking I could put the spare £12,500 into an ISA with someone else. I've since found out the rules prohibit me from doing so. Have I got this right? With the pitiful return, it doesn't seem worthwhile adding to my Virgin stake without it being protected, I'm thinking of sticking the £12,500 (plus a bit more) into a one-year Atom saver (1.95%) which will give me as much interest as the ISA but will be taxable. I'm just annoyed I wont be able to take up my full ISA allowance for this year. Many thanks.

Vortigern

If you are desperate to use your allowance in cash ISAs, you could do a partial transfer of previous year's contributions to another provider and then add the remainder of this year's contribution to Virgin.

This assumes your Virgin is not a fixed term ISA and that Virgin allow partial transfers out.

Alternatively, since you already have a substantial cash ISA, you could put the rest of your allowance into a stocks & shares ISA.

[Deleted User]

Yeah, they are fixed term so, no go I'm afraid.

kuratowski

If you are really insistent on keeping your entire savings in cash, (i.e. stocks & shares are out), but you are worried about the 85k FSCS limit, then perhaps you would be more comfortable with the NS&I cash ISA? That's fully guaranteed by the government, i.e. no 85k limit.

As you're in a fixed term product you would either have to accept a penalty for transferring out before the term ends, or wait till the end of the term (leaving the rest of this year's allowance unused). It's up to you which of those you feel is least bad.

[Deleted User]

I think I'll let the allowance go, I'm retired so my total amount is unlikely to go up and it wont be too many years before I have to start taking money out. Anyway the best ISA rate for a year fixed I could see is 1.52% so even with tax the Atom at 1.95% shows a slightly better return (and I can put more in).

Thanks for the help, I just wanted to make sure I hadn't got it wrong.

badger09

Deleted_User wrote: »

I think I'll let the allowance go, I'm retired so my total amount is unlikely to go up and it wont be too many years before I have to start taking money out. Anyway the best ISA rate for a year fixed I could see is 1.52% so even with tax the Atom at 1.95% shows a slightly better return (and I can put more in).

Thanks for the help, I just wanted to make sure I hadn't got it wrong.

Are you likely to receive interest in excess of £1k pa on your non ISA savings? (assuming you're a BR taxpayer)

Are you using high interest current accounts & regular savers paying up to 5%?

[Deleted User]

1) Yes

2) Yes.

Alexland

Deleted_User wrote: »

I'm retired so my total amount is unlikely to go up and it wont be too many years before I have to start taking money out.

Even so it's worth considering investment for the money that will be withdrawn towards the end of your retirement which is hopefully still many years away. Otherwise it will almost certainty be ravaged by your below inflation cash returns.

Alex.

ValiantSon

Deleted_User wrote: »

I'm thinking of sticking the £12,500 (plus a bit more) into a one-year Atom saver (1.95%) which will give me as much interest as the ISA but will be taxable. I'm just annoyed I wont be able to take up my full ISA allowance for this year. Many thanks.

Yes, it will be taxable, but that doesn't necessarily mean that it will be taxed. How close will you be, next financial year, to exceeding your personal savings allowance of £1,000? (I'm assuming that you are a basic rate tax payer. If you are a higher rate payer then it's £500 and you have bigger issues to deal with, e.g. getting some money into a SIPP to take yourself out of higher rate tax). On £12,500 at 1.95% your total interest will be £243.75, so you'd need to earn another £756.26 interest in the tax year to pay any tax (and you only pay it on the sum above the allowance, so if you earned £1,100 you would pay £20 tax.

[Deleted User]

Yeah I'll be over, got a fair sum in Atom that takes care of that to be honest. Not to worry, I reckon there'll be some left in the bank when I end this mortal coil so as you cant take it with you.......