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

jr941

You stated:

''There isn't a NatWest HTB ISA restriction as such, it's the overall ISA scheme rules that you've fallen foul of if you've paid into multiple cash ISAs with different providers.''

I thought this was Natwest's regulation. Co-Op doesn't have any issue with me having a Help to Buy ISA with Natwest. They didn't indirectly threaten me to close the Help to buy ISA.

eskbanker

jr941 said:

To my understanding, Natwest Help to Buy ISA's restriction is that I cannot have a Cash ISA with any other bank with money in it. It can only be with them, not any other provider   In my case, it is with Co-Op, so to my understanding this is the breach. Isn't Natwest going to badmouth me to HMRC for sure now, as I really don't have a fix to this?

jr941 said:

You stated:

''There isn't a NatWest HTB ISA restriction as such, it's the overall ISA scheme rules that you've fallen foul of if you've paid into multiple cash ISAs with different providers.''

I thought this was Natwest's regulation. Co-Op doesn't have any issue with me having a Help to Buy ISA with Natwest. They didn't indirectly threaten me to close the Help to buy ISA.

The overall ISA scheme rule (legislated by government) is that you can only pay into one ISA of each type in any tax year, which is a standard across all providers, and is non-negotiable, although NatWest are one of several providers who operate the split/portfolio ISA model, whereby multiple cash ISAs are effectively treated as being a single cash ISA.

This is why you can fund a NatWest HTB ISA and also another cash ISA with NatWest, but not with anyone else.

However, when you opened your Co-op ISA, you will have made a false declaration that you hadn't subscribed to another cash ISA in the same tax year - if you had admitted to having done so, then Co-op wouldn't have been permitted to accept your application.

NatWest isn't going to 'badmouth' you to HMRC, but both NatWest and Co-Op will simply submit their annual year-end returns to HMRC in the standard way, after which HMRC may notice that you've paid into multiple cash ISAs in breach of the regulations and if they do, then they might choose to declare the second as invalid (and insist on the interest income being treated as taxable), but probably won't....

masonic

I suspect the actual amount of tax you'd pay in the worst case scenario where HMRC void the ISA is less than the interest penalty you'd pay for breaking the fix. You have (hopefully) cancelled the ISA in which you exceeded the annual allowance, and HMRC takes a dimmer view of this than spreading money between too many ISAs within the limit, so I think you've done as much as you can at this point and it wouldn't make sense to take any further.

Given the law is changing in April and you'd be allowed to pay into both of your remaining ISAs after the change, it would be, IMHO, excessive of HMRC to make an example of you given you opened the second cash ISA after the rule change was announced.

jr941

Wow, thank you. You guys are so good at this. Are you all volunteers? 

May the Lord bless you all with 100 beautiful daughters and 100 handsome sons or whatever you desire the most.

Amen

All your guidance really meant a lot!!!!

What's the best way forward for me on 6th April 2024 with this ISA stuff? I will be hitting 12 k in the Help to Buy ISA, which is the most to my understanding for me to secure the maximum of 3 k from the government. I understand I need to make this decision of buying a house or a flat by November 2029. Thus, I will be cancelling the automated transfer of £200 in early April. 

Is my only ISA option now with Natwest due to the general restriction? If it is, I am thinking to open fixed deposit ISA with Natwest and put 20 k there for that year. I really hope this plan is not breach of any of the regulations   

masonic

We're all just here to learn and share information.

From 6th April you'll be free to split your money between multiple cash ISAs with different providers if you wish, but as you'll stop paying into the HTB ISA, it will make things simpler in terms of managing your annual allowance.

eskbanker

jr941 said:
What's the best way forward for me on 6th April 2024 with this ISA stuff? I will be hitting 12 k in the Help to Buy ISA, which is the most to my understanding for me to secure the maximum of 3 k from the government. I understand I need to make this decision of buying a house or a flat by November 2029. Thus, I will be cancelling the automated transfer of £200 in early April. 

Is my only ISA option now with Natwest due to the general restriction? If it is, I am thinking to open fixed deposit ISA with Natwest and put 20 k there for that year. I really hope this plan is not breach of any of the regulations   

Once we tick over into the new tax year, the restrictions are lifted so you can pay into whatever permutation of ISAs you want, subject only to not exceeding £20K in total (there's still a £4K limit on Lifetime ISA contributions but that's irrelevant here).

If you've put £20K into ISAs this year and are planning to do the same next year as well, plus the accumulated ~£10K in the HTB ISA, you ought to be approaching the point at which it makes sense to get on with buying your first property anyway?  Just to check, you are aware that the property value cap for HTB-assisted purchases is £250K outside London (or £450K there)?

jr941 said:

May the Lord bless you all with 100 beautiful daughters and 100 handsome sons or whatever you desire the most.

Not sure the household budget would stretch to feeding another 200 mouths....

jr941

masonic said:

We're all just here to learn and share information.

From 6th April you'll be free to split your money between multiple cash ISAs with different providers if you wish, but as you'll stop paying into the HTB ISA, it will make things simpler in terms of managing your annual allowance.

Wow, this is gold. Thank you!

jr941

eskbanker said:

jr941 said:
What's the best way forward for me on 6th April 2024 with this ISA stuff? I will be hitting 12 k in the Help to Buy ISA, which is the most to my understanding for me to secure the maximum of 3 k from the government. I understand I need to make this decision of buying a house or a flat by November 2029. Thus, I will be cancelling the automated transfer of £200 in early April. 

Is my only ISA option now with Natwest due to the general restriction? If it is, I am thinking to open fixed deposit ISA with Natwest and put 20 k there for that year. I really hope this plan is not breach of any of the regulations  

If you've put £20K into ISAs this year and are planning to do the same next year as well, plus the accumulated ~£10K in the HTB ISA, you ought to be approaching the point at which it makes sense to get on with buying your first property anyway?  Just to check, you are aware that the property value cap for HTB-assisted purchases is £250K outside London (or £450K there)?

jr941 said:

May the Lord bless you all with 100 beautiful daughters and 100 handsome sons or whatever you desire the most.

Not sure the household budget would stretch to feeding another 200 mouths....

Yes, I am aware of the upper limits but on the other hand, I am not too sure about my future plans of locking an asset like that here. The weather on our gorgeous island really bothers me. 

You stated:

''Once we tick over into the new tax year, the restrictions are lifted so you can pay into whatever permutation of ISAs you want, subject only to not exceeding £20K in total (there's still a £4K limit on Lifetime ISA contributions but that's irrelevant here).''

Yes, I cannot apply for a lifetime ISA. Apart from the fixed deposit ISA, Is my only other ISA option is the stocks and shares account?  I feel like a simpleton, when it comes to these things so I really want to play safe as for now.

Thanks!

eskbanker

jr941 said:
Apart from the fixed deposit ISA, Is my only other ISA option is the stocks and shares account?  I feel like a simpleton, when it comes to these things so I really want to play safe as for now.

The gov.uk page linked earlier states the four types (cash, S&S, innovative finance and lifetime), albeit 40+ year olds only have access to the first three of these - you can already pay into one of each of these in any tax year, but from April you can pay into any combination (up to £20K).

jr941

Thank you for the above.

Update:

Natwest has transferred the £1003 to my savings. Also added the interest of around £2 or something first for keeping this money in this account for that duration. 

It also says: GRS/Close in that transaction: (Account number here)/GRS/CLOSE

Does this mean the second ISA of Natwest has been closed in the right manner?