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

masonic

Far be it from me to press the issue, but have you considered the Lifetime ISA option at all?

jr941

Yes, I have just looked up life time ISA and I am in the process of digesting the text. None of this feels straightforward to me  

I had gone to the branch. They asked me to write a letter which 'they' will post to the relevant department themselves. I still have my concerns because this was done only a day before the expiry of the cooling off period. The letter along with the adviser did confirm that it is the date on the letter which is relevant here.

Since this was an extremely traumatic experience for me, I feel like backing out from everything and cancelling the Co-Op ISA as well.

Since the above is in breach of Natwest Help to Buy ISA, isn't this action indispensable?

By the way, what are the consequences of breaching their regulation? Since Natwest made me aware of this breach, and to my understanding, the bank clerk will inform HMRC about this. So I am also dreading the consequences.

Many thanks in anticipation. All your guidance is very much appreciated.

masonic

jr941 said:

Yes, I have just looked up life time ISA and I am in the process of digesting the text. None of this feels straightforward to me  

I had gone to the branch. They asked me to write a letter which 'they' will post to the relevant department themselves. I still have my concerns because this was done only a day before the expiry of the cooling off period. The letter along with the adviser did confirm that it is the date on the letter which is relevant here.

Since this was an extremely traumatic experience for me, I feel like backing out from everything and cancelling the Co-Op ISA as well.

Since the above is in breach of Natwest Help to Buy ISA, isn't this action indispensable?

By the way, what are the consequences of breaching their regulation? Since Natwest made me aware of this breach, and to my understanding, the bank clerk will inform HMRC about this. So I am also dreading the consequences.

Many thanks in anticipation. All your guidance is very much appreciated.

As has been mentioned earlier in the thread, the worst HMRC can do is decide that your Co-op ISA will be treated as a taxable savings account. 

The issue you have is that your Natwest HTB ISA and the Co-op ISA both contain money that you have paid in during the current tax year. To address this, you would need to remove the money paid in during the current tax year from one of these two accounts. 

So far you have focused on the Co-op ISA, and this would be the simplest option as you need only tell Co-op you are exercising your cooling off rights, you'll get all of your money back and are then in the clear. Like eskbanker, I don't think you should risk a transfer in this case as you may incur an early withdrawal penalty from Co-op.

The alternative is to switch from using a HTB ISA (which is a type of cash ISA) for your house saving to a Lifetime ISA (which is its own type of ISA) once you have checked the features and confirmed it would be suitable for your needs. If you open one of these, transfer in from the HTB ISA £4k indicating you wish to include your current year subscriptions, and cancel the 'other' Natwest ISA, you can keep the Co-op account as your only remaining cash ISA for this tax year. You would then need to follow through the process of transferring the rest of your HTB ISA to the Lifetime ISA £4k per tax year and then use only the Lifetime ISA going forward. Details of the current balance of your HTB ISA and earliest you see yourself being in a position to buy would be helpful to rule this in or out.

eskbanker

masonic said:
So far you have focused on the Co-op ISA, and this would be the simplest option as you need only tell Co-op you are exercising your cooling off rights, you'll get all of your money back and are then in the clear. Like eskbanker, I don't think you should risk a transfer in this case as you may incur an early withdrawal penalty from Co-op.

I don't think the Co-op ISA is still within its cooling-off period, unless they confirmed otherwise yesterday, based on the welcome letter being delayed?

masonic

eskbanker said:

masonic said:
So far you have focused on the Co-op ISA, and this would be the simplest option as you need only tell Co-op you are exercising your cooling off rights, you'll get all of your money back and are then in the clear. Like eskbanker, I don't think you should risk a transfer in this case as you may incur an early withdrawal penalty from Co-op.

I don't think the Co-op ISA is still within its cooling-off period, unless they confirmed otherwise yesterday, based on the welcome letter being delayed?

Perhaps not, this thread beats any of the ISA rules for complexity!

In that case it makes the Lifetime ISA option more attractive, assuming of course it is a suitable replacement for the HTB ISA.

jr941

Thanks. This is gold!

I have paid around £18,000 into my Help to Buy ISA this year. It has just over 11 k.

Just googled what was suggested:

''Can I transfer money from a help to buy ISA to a lifetime ISA?

You can choose to transfer all, or just some, of your Help to Buy ISA into a Lifetime ISA – as long as you don't transfer more than your £4,000 annual LISA allowance during a single tax year. If you've already paid into your LISA this tax year, you can only transfer the amount that remains of your £4,000 allowance.''

Is there no weird restriction for having a Lifetime ISA with Natwest? Can I have a Co-Op Fixed deposit  ISA with the Natwest Help to Buy ISA?

To my understanding, I only need to call Natwest now and in form them about the letter posted about the Fixed deposit ISA's cancellation on the 13th day - all done via one of their branches yesterday. 

And then request them to switch my Help to buy ISA to a Lifetime ISA?

Did I understand this correctly?

jr941

Sorry, I meant £1800, not 18 k lol A maximum of £200 each month is allowed. 

jr941

Sorry, I meant £1800, not 18 k lol A maximum of £200 each month is allowed. 

jr941

Co-Op ISA is out of the cooling off period. It's within the 30 day limit but that only means that I can put more money in, if required. The latter is completely irrelevant in my case.

masonic

jr941 said:

To my understanding, I only need to call Natwest now and in form them about the letter posted about the Fixed deposit ISA's cancellation on the 13th day - all done via one of their branches yesterday. 

And then request them to switch my Help to buy ISA to a Lifetime ISA?

Did I understand this correctly?

Since you've already cancelled the other Natwest ISA you paid into, you wouldn't need to do anything more via Natwest. You'd apply for a Lifetime ISA elsewhere (Natwest doesn't offer them) and then use that new provider's transfer process to transfer in £4k (to include current year subscriptions) from your ~£11k HTB ISA. Based on this list, either Moneybox or Skipton BS would be the best options as these both permit transfers in from other types of ISA. You can transfer another £4k after 5th April and the rest the year after that. You can keep your Co-op cash ISA because you will be treated as having paid into that and the Lifetime ISA in this tax year, which is allowed, and after the first transfer your HTB ISA will no longer contain any 2023/24 tax year money, so this is also ok.

You have plenty of time to work your way through this. The transfer would need to complete by April to avoid the new money being in the HTB ISA at the end of the tax year when it would be reported to HMRC.