Open isa or wait another month?

masonic

savit4l8er said:

Maybe it depends on your situation and no "one size" fits all?  A spread over coming months may be worth considering and just average your return.  

I have a ladder of fixed term accounts (non-ISA). I buy a new one each quarter as one matures. I don't try to time the market, my ladder is designed to replace my income should I lose that, so I want my capital returned at regular intervals. This approach normally keeps my returns well above the prevailing easy access rate, but recently the two have touched, and its possible they will briefly cross. That is to be expected when rates are hiked so quickly, but in the long run this approach works better than staying in easy access or notice accounts.

cricidmuslibale

masonic said:

savit4l8er said:

Maybe it depends on your situation and no "one size" fits all?  A spread over coming months may be worth considering and just average your return.  

I have a ladder of fixed term accounts (non-ISA). I buy a new one each quarter as one matures. I don't try to time the market, my ladder is designed to replace my income should I lose that, so I want my capital returned at regular intervals. This approach normally keeps my returns well above the prevailing easy access rate, but recently the two have touched, and its possible they will briefly cross. That is to be expected when rates are hiked so quickly, but in the long run this approach works better than staying in easy access or notice accounts.

It's entirely because of what's written above that the restriction of only being able to put new money into one cash ISA each tax year is, well, so very very restricting! (and I believe wholly unnecessary!) Why on earth are we not allowed, for example, to put two chunks of £10k each into two separate fixed rate Cash ISAs, say one for each half of the tax year!? After all, we would still be sticking to putting no more than the maximum allowance of £20k of new money into ISAs per tax year, it's just that we would be using two Cash ISA's rather than say, one Cash ISA and one Stocks and Shares ISA which is permitted of course.

Albermarle

It is good point, but you can console yourself with the fact the UK has some of the most generous limits on tax free savings and investments.

masonic

It made sense back in the days of mini- and maxi- ISAs because either you could subscribe everything to one maxi-ISA, or use two mini-ISAs that had separate limits. ISA managers could therefore know about and prevent oversubscriptions, leaving HMRC to deal with just those funding too many ISAs. This rule really ought to have been dropped when the system was reformed to give people the freedom to spread their allowance between types in any proportion they chose.

It's relatively easy to get around the restriction. If you fund an (flexible) easy access ISA towards the end of one tax year, you can then use this as a source account for partial transfers into fixed term ISAs spread over the next tax year. Once suitably subdivided, fixed accounts can be transferred directly to new fixes as they mature.

cricidmuslibale

Albermarle said:

It is good point, but you can console yourself with the fact the UK has some of the most generous limits on tax free savings and investments.

masonic said:

It made sense back in the days of mini- and maxi- ISAs because either you could subscribe everything to one maxi-ISA, or use two mini-ISAs that had separate limits. ISA managers could therefore know about and prevent oversubscriptions, leaving HMRC to deal with just those funding too many ISAs. This rule really ought to have been dropped when the system was reformed to give people the freedom to spread their allowance between types in any proportion they chose.

It's relatively easy to get around the restriction. If you fund an (flexible) easy access ISA towards the end of one tax year, you can then use this as a source account for partial transfers into fixed term ISAs spread over the next tax year. Once suitably subdivided, fixed accounts can be transferred directly to new fixes as they mature.

Thank you very much for both your responses to my post above! @masonic Thank you also for clearly outlining above how to efficiently get around the present limit of 1 cash ISA per tax year for new money!

mark_cycling00

Sorry to ask for clarification but don't want to accidentally do the wrong thing...
So it is OK for me to:

1) transfer £10,000 from an existing shares ISA (that has a £10,000 cash balance) into a new cash ISA with a new provider
2) in a month or so, open a new cash ISA with a different provider with new cash (not a transfer)
3) I cannot open any more NEW ISAs but I can do additional transfers?

e.g.:
1) October: Santander NEW ISA: transfer from Vanguard existing ISA
2) November: Newcastle NEW ISA: non-ISA cash. Need to use full ISA allowance or lose it
3) December: Yorkshire NEW ISA: transfer from another existing ISA

many thanks

masonic

mark_cycling00 said:

Sorry to ask for clarification but don't want to accidentally do the wrong thing...
So it is OK for me to:

1) transfer £10,000 from an existing shares ISA (that has a £10,000 cash balance) into a new cash ISA with a new provider
2) in a month or so, open a new cash ISA with a different provider with new cash (not a transfer)
3) I cannot open any more NEW ISAs but I can do additional transfers?

e.g.:
1) October: Santander NEW ISA: transfer from Vanguard existing ISA
2) November: Newcastle NEW ISA: non-ISA cash. Need to use full ISA allowance or lose it
3) December: Yorkshire NEW ISA: transfer from another existing ISA

many thanks

You can open an unlimited number of new ISAs, and transfer as many times as you wish, so you can completely ignore those aspects of your query.

You can add new money to only one ISA of each type per tax year.

mark_cycling00

Brilliant. Thanks 

Trynsave2

masonic said:

It made sense back in the days of mini- and maxi- ISAs because either you could subscribe everything to one maxi-ISA, or use two mini-ISAs that had separate limits. ISA managers could therefore know about and prevent oversubscriptions, leaving HMRC to deal with just those funding too many ISAs. This rule really ought to have been dropped when the system was reformed to give people the freedom to spread their allowance between types in any proportion they chose.

It's relatively easy to get around the restriction. If you fund an (flexible) easy access ISA towards the end of one tax year, you can then use this as a source account for partial transfers into fixed term ISAs spread over the next tax year. Once suitably subdivided, fixed accounts can be transferred directly to new fixes as they mature.

Thank you for that helpful hint. I've got a pitiful fixed rate isa I need to transfer and was planning on waiting for a better rate to jump and pay the 120 day penalty. I was also planning to add new money once transferred to keep funds together for ease. Now need to have a think about keeping them separate for maturity reasons. Let's hope I don't lie awake pondering...