Best Cash ISA

Miranda25

Many thanks for your time. 
So for future I just should not choose providers which ask for deposits to avoid this situation?

masonic

Miranda25 said:

Many thanks for your time. 
So for future I just should not choose providers which ask for deposits to avoid this situation?

You should just refrain from paying new money into an ISA if you have opened it just to transfer previous year money. If you had clarified with Ford Money, they would have told you it was not necessary to pay in any new money since you were transferring.

Miranda25

masonic said:

Miranda25 said:

Masonic I paid into HTB in April. Then I just wanted to transfer last year contributions into Ford's fixed ISA. If they would not ask about deposit I would not break any rules. Not sure what shall I do now? Ford Money requested transfer from Nationwide. Could I just wait for until transfer completed and then withdraw this deposit of £500? This way I would keep only last year contributions in Ford's Money account? Everything so complicated.

On what date did you pay into the HTB ISA in April? If it was 5th April or before, then the money you paid into the Ford Money ISA is valid, otherwise it is not. Ford Money offers ISA flexibility, but this is a fixed term ISA, so withdrawal might not be possible, and flexibility might not extend to this ISA. In any case, flexible withdrawal of subscriptions is not guaranteed to prevent a problem with HMRC down the line. Are you still within the cooling off period for your fixed ISA? You could cancel the account and transfer, get your £500 back and start again.

Sorry, when cooling off period starts with cash ISA? Ford Money informed me about successful application on 05th May and the same day they requested transfer from Nationwide. Thanks.

masonic

Miranda25 said:

masonic said:

Miranda25 said:

Masonic I paid into HTB in April. Then I just wanted to transfer last year contributions into Ford's fixed ISA. If they would not ask about deposit I would not break any rules. Not sure what shall I do now? Ford Money requested transfer from Nationwide. Could I just wait for until transfer completed and then withdraw this deposit of £500? This way I would keep only last year contributions in Ford's Money account? Everything so complicated.

On what date did you pay into the HTB ISA in April? If it was 5th April or before, then the money you paid into the Ford Money ISA is valid, otherwise it is not. Ford Money offers ISA flexibility, but this is a fixed term ISA, so withdrawal might not be possible, and flexibility might not extend to this ISA. In any case, flexible withdrawal of subscriptions is not guaranteed to prevent a problem with HMRC down the line. Are you still within the cooling off period for your fixed ISA? You could cancel the account and transfer, get your £500 back and start again.

Sorry, when cooling off period starts with cash ISA? Ford Money informed me about successful application on 05th May and the same day they requested transfer from Nationwide. Thanks.

It would start from when your application for the ISA was accepted, so you should be within the cancellation period. If they would be willing to cancel your application to subscribe to the ISA in the 2020/21 tax year, while preserving your application for the previous year transfer then that would be the ideal solution to your problem. I'm not sure if they'd be able to do that, but there is only one way to find out.

eskbanker

Miranda25 said:
Sorry, when cooling off period starts with cash ISA? Ford Money informed me about successful application on 05th May and the same day they requested transfer from Nationwide.

https://www.fordmoney.co.uk/savings-products/fixed-cash-isa

Your right to cancel

Should you decide it’s not for you, you can cancel your Fixed Cash ISA without charge within the first 14 days of account opening. The balance on your account, and any interest earned, will be repaid in full either to you, or to the previous ISA provider (if you transferred-in an ISA balance). Any money deposited will not count towards your ISA annual allowance for the tax year. Where you have closed your account under the Right to Cancel process, you can open a subsequent Cash ISA with us or another financial institution, up to your annual allowance for the tax year.

Miranda25

masonic said:

You were not permitted to pay the £500 into the Ford Money ISA as you had already paid into a different cash ISA in this tax year. If you leave it were it is, HMRC will write to you some time after April 2021 and inform you that you broke the ISA rules and let you know what action they'll be taking as a result. They are at liberty to instruct Ford Money to remove the money from the ISA and treat any interest as taxable. You could just leave the money there and accept the telling off and potential tax liability. Alternatively, you could contact Ford Money and see if they'd be willing to cancel the current year ISA contribution under distance selling regulations while leaving the transfer to complete.

I sent 2 secure emails to Ford and they did not respond. I am not keen to call them as it is time-consuming. 
Not sure if I need to try to withdraw £500 or better to leave as it is? Would I get tax liability for £500 or full ISA amount in future? Thanks.

masonic

Miranda25 said:

masonic said:

You were not permitted to pay the £500 into the Ford Money ISA as you had already paid into a different cash ISA in this tax year. If you leave it were it is, HMRC will write to you some time after April 2021 and inform you that you broke the ISA rules and let you know what action they'll be taking as a result. They are at liberty to instruct Ford Money to remove the money from the ISA and treat any interest as taxable. You could just leave the money there and accept the telling off and potential tax liability. Alternatively, you could contact Ford Money and see if they'd be willing to cancel the current year ISA contribution under distance selling regulations while leaving the transfer to complete.

I sent 2 secure emails to Ford and they did not respond. I am not keen to call them as it is time-consuming. 
Not sure if I need to try to withdraw £500 or better to leave as it is? Would I get tax liability for £500 or full ISA amount in future? Thanks.

Even Ford Money fixed rate ISAs are flexible, but if you make a withdrawal you would need to pay the term breakage charge, equivalent to 45-270 days gross interest depending on the length of your fix. What tax liability (if any) would you incur if your savings income increased by a few quid in this tax year? Are you already maxing out your Personal Savings Allowance?

Miranda25

No any tax liability by now as I keep savings in ISA accounts and I still can use PSA. 
Just tried to say that it would not be fair to tax me on full ISA account (which I keep in Ford Money) only because I made mistake with transferring a deposit of £500. Can I argue with HMRC in future that my ISA a/c should not be taxable if I realised my mistake but Ford Money were not approachable to cancel current year ISA contribution? :-))
Another thing is if HMRC instruct Ford Money to move the money from ISA it means I will lose ISA cover? Maybe this is not a big problem considering that ISA a/c do not have good interest rates anymore? 

masonic

Miranda25 said:

No any tax liability by now as I keep savings in ISA accounts and I still can use PSA. 
Just tried to say that it would not be fair to tax me on full ISA account (which I keep in Ford Money) only because I made mistake with transferring a deposit of £500. Can I argue with HMRC in future that my ISA a/c should not be taxable if I realised my mistake but Ford Money were not approachable to cancel current year ISA contribution? :-))
Another thing is if HMRC instruct Ford Money to move the money from ISA it means I will lose ISA cover? Maybe this is not a big problem considering that ISA a/c do not have good interest rates anymore? 

I was sure I'd addressed your other point in my previous reply, but I must have just thought it and not typed it... Only the money subscribed in the current tax year (the current year account) would be subject to action by HMRC. Since making the interest on that £500 taxable will not result in you paying any tax, you stand to make no loss if you do nothing.

Miranda25

masonic said:

Miranda25 said:

No any tax liability by now as I keep savings in ISA accounts and I still can use PSA. 
Just tried to say that it would not be fair to tax me on full ISA account (which I keep in Ford Money) only because I made mistake with transferring a deposit of £500. Can I argue with HMRC in future that my ISA a/c should not be taxable if I realised my mistake but Ford Money were not approachable to cancel current year ISA contribution? :-))
Another thing is if HMRC instruct Ford Money to move the money from ISA it means I will lose ISA cover? Maybe this is not a big problem considering that ISA a/c do not have good interest rates anymore? 

I was sure I'd addressed your other point in my previous reply, but I must have just thought it and not typed it... Only the money subscribed in the current tax year (the current year account) would be subject to action by HMRC. Since making the interest on that £500 taxable will not result in you paying any tax, you stand to make no loss if you do nothing.

:-):smile: It is clear now. Thank you for your time.