Confused - ISAs - One of the Banks talking nonsense it seems :/

eskbanker

jr941 said:

This is great. Thank you. I will immediately do what Natwest has asked me to do, which is to fill a transfer form and get the money transferred from CO-OP fixed deposit ISA to Natwest Fixed deposit's ISA.

Both are in their cooling off period.

If the Co-Op account is still within its cooling-off period then it'll probably be easier and neater to simply cancel it, rather than initiating an ISA transfer that may not happen by the end of the cooling-off period.

jr941 said:
You stated:

''Yes, I get that this was what you originally had in mind, but given what you now know about the rules, you'll hopefully understand that this isn't possible.  Bear in mind that £20K is the annual allowance - you can't have paid £10K into a HTB ISA this tax year, but how much have you paid into which specific accounts since 6 April 2023?''

I can only transfer £200 to my Help To Buy ISA, so the end of year total would be £2400. 

The remaining is meant to be in the fixed deposit ISA.

I just wanted to check (in the absence of meaningful real figures) that you understood that £20K is the annual limit - if you had £10K in HTB then most of that would be from previous years so "the remaining 10K" isn't a realistic example.

jr941 said:

By the way, if I had opted for a three year fixed deposit ISA, does that mean I am allowed to pay another 20 k in the second and third year and make my total deposit to 60 k?

Not really in practice - you will get further £20K allowances each year but fixed term products only usually have a narrow initial funding window, after which you can't pay in any more.  You could open more ISAs though....

jr941 said:

(Minus the amount of the 12 k which I need to keep in my help to buy ISA). To my understanding, when I am ready to buy a property, I will get 3 k from the government based on this 12 k.

However, I don't think will be ready to buy anything any time soon and I understand the deadline for me to use this is 2029

You should consider using a Lifetime ISA instead, as you can obtain the 25% bonus on a higher amount - read up on this, and how it compares with HTB, at https://www.moneysavingexpert.com/savings/lifetime-isas/

masonic

Most fixed ISAs do not allow additional payments after the first few weeks, so you'd normally need to take out another fix to use in the next tax year.

Incidentally, as you are fixing for 3 years and do not see yourself buying soon, have you considered transitioning to a Lifetime ISA? This can be paid into alongside a cash ISA held elsewhere and also has other helpful differences like a higher maximum property value, a more generous annual allowance and no time limit to use. You could transfer £4k per tax year from your HTB ISA, so it depends on your current balance whether it would make sense.

If you transferred all of your current year contributions from your HTB ISA and ceased funding it, you could leave your fixed ISA where it is.

jr941

I have dedicated the whole day to this and I am still not done. Still in the process of filling up the transfer form.

Wow, this Cash ISA stuff is so complex. I wonder how many people mess it up every year. They really need to make this simpler. Thanks for all your guidance so far. It is much appreciated.

eskbanker

jr941 said:

I have dedicated the whole day to this and I am still not done. Still in the process of filling up the transfer form.

As above, it may not be necessary or advisable to handle it as a transfer.

jr941 said:

Wow, this Cash ISA stuff is so complex. I wonder how many people mess it up every year. They really need to make this simpler.

As above, they are!

masonic

To summarise, your options are:

1) Do as Natwest has suggested, fill out an ISA transfer form at the risk of the transfer taking longer than the remaining cooling off period and having to pay a penalty

2) Contact Co-op directly to cancel, get the money back into your bank account ASAP and separately open and fund the Natwest ISA

3) Open a Lifetime ISA* and transfer £4k from your HTB ISA including current year subscriptions, then stop paying into the HTB ISA, keep the Co-op ISA (top it up with anything you could have paid into the HTB ISA in the last few months of the tax year), then in April transfer another £4k from the HTB ISA and so on until it is empty AND contribute up to £20k to a cash ISA wherever you wish. Once the HTB ISA is nearly empty, you split your allowance between Lifetime ISA and cash ISA.

* Though do read up on Lifetime ISAs before taking the plunge with this option.

jr941

Thank you everyone. I will look into this tomorrow.

Both accounts are in their cooling off period actually.

The Natwest adviser said that I will be losing my allowance for moving 'any' funds from my ISA to a savings account.

To my understanding, if it is not a transfer then I will be losing 'the entire remaining allowance as well' which is £20,000 - £2400 for this year.

My head is exploding. This is such an absurd system. However, I will persevere and tryyyyy to comprehend all this. May the Lord have mercy on people who don't have a natural aptitude to understand such complexities easily  

eskbanker

jr941 said:

Thank you everyone. I will look into this tomorrow.

Both accounts are in their cooling off period actually.

The Natwest adviser said that I will be losing my allowance for moving 'any' funds from my ISA to a savings account.

To my understanding, if it is not a transfer then I will be losing 'the entire remaining allowance as well' which is £20,000 - £2400 for this year.

No, the effect of cancelling an ISA within its cooling-off period is to void the account creation and funding as if it had never happened, so any subscriptions made (and then reversed by voiding the account) don't count towards your annual allowance or hinder its use elsewhere.

jr941

Thanks. I wonder why the Natwest adviser said that I will use my allowance I am on the phone with Co-Op right now to cancel. 

jr941

The Co-Op adviser said the same thing. Cancelling within the cooling off period also loses the allowance aka the money paid into that account in that early duration

jr941

The senior adviser of Co-Op also couldn't find this restriction of Nat not letting people open a fixed deposit ISA with a different bank. 

I just downloaded the two pdfs and I cannot find anything. Was this adviser a loony or something:

natwest dot com slash savings slash existing-customers dot html - I cannot post links yet

The two docs are available here:

Where can I find more information?

Our key features document and information sheets sets out the key information you need to know about your account.

Download Help to Buy: ISA Key Features (PDF, 58 KB)

Download Help to Buy: ISA information sheet (PDF, 132 KB)