Pre-emptive ISA opening

chutuk

Hi All,

Sorry but another ISA question! 

In the current 23/24 tax year I've used up my £20k ISA allowance, but haven't 'opened' a new ISA. Instead I topped up an ISA I opened in the 22/23 tax year. 

I believe this could make me eligible to be able to open an ISA in the remaining days of the current tax year, but obviously not fund it until after April 6th.  Can you please confirm if this is the case.

Additionally, looking at the Zopa Smart ISA the rules state You must : 

• have not paid into a cash ISA with another provider this tax year
• have not already used up your total annual ISA allowance of £20,000 this tax year  

Are these rules specific to this product and not wider industry rules?  If the above is true it seems a shame I can't pre-emptively open an account in preparation for the new tax year and take advantage of their 0.5 uplift in interest rates. 

Can anyone suggest a decent ISA that will allow me to pre-emptively open an account?  Criteria are must be flexible, interest must be paid monthly and not Virgin Money.

Thanks

masonic

There seems to be a fundamental misunderstanding underpinning your entire post. Namely, that there is no limit to the number of ISAs you can open.

So it does not matter whether or not you opened an ISA during this tax year. It is always possible to open another (but sometimes pointless to do so). 

Any ISA that you do not fund during one tax year is not valid for the next. Only ISAs that you pay into each tax year can be continued. Your provider would need to you reapply to subscribe to the ISA, or open a new ISA, if there is a tax year where you do not pay anything in. They may close an unfunded ISA after a period of time because most have a minimum opening balance to be funded with either new money or a transfer. An ISA may not be considered fully opened until a balance is applied to it.

Why would you not just open your ISA in the next tax year when you are able to fund it immediately? Chip is currently offering a flexible ISA paying 5.10%, which will probably still be around in a month's time.

chutuk

Hi,

Thanks for the reply.  There are some providers offering incentives now for ISAs opened during the remainder of this tax year which I thought may be beneficial.  E.g Zopa are paying an additional 0.5% on top of their standard interest rate during the 24/25 tax year for ISAs opened before April 5th. 

I possibly am being a bit too premature, but just thought I'd take a look to shop the market and try and get the best deal ahead of April 6th, especially if you're offered 30days in order to fund the account. 

masonic

Have you considered opening the Zopa one and transferring in from your current ISA?

chutuk

masonic said:

Have you considered opening the Zopa one and transferring in from your current ISA?

Not worth it, my current one is paying 5.61% for a fixed term, so am happy with the returns on this

badger09

masonic said:

There seems to be a fundamental misunderstanding underpinning your entire post. Namely, that there is no limit to the number of ISAs you can open.

So it does not matter whether or not you opened an ISA during this tax year. It is always possible to open another (but sometimes pointless to do so). 

Any ISA that you do not fund during one tax year is not valid for the next. Only ISAs that you pay into each tax year can be continued. Your provider would need to you reapply to subscribe to the ISA, or open a new ISA, if there is a tax year where you do not pay anything in. They may close an unfunded ISA after a period of time because most have a minimum opening balance to be funded with either new money or a transfer. An ISA may not be considered fully opened until a balance is applied to it.

Why would you not just open your ISA in the next tax year when you are able to fund it immediately? Chip is currently offering a flexible ISA paying 5.10%, which will probably still be around in a month's time.

BIB
Normally I’d agree & I’m just musing really😊   

VM are currently offering an Exclusive FRISA @ 5.25% with a funding window of 30 days (from product withdrawal) which takes us into 2024/25. I don’t envisage them asking for a renewal declaration, but who knows. 

masonic

badger09 said:

masonic said:

There seems to be a fundamental misunderstanding underpinning your entire post. Namely, that there is no limit to the number of ISAs you can open.

So it does not matter whether or not you opened an ISA during this tax year. It is always possible to open another (but sometimes pointless to do so). 

Any ISA that you do not fund during one tax year is not valid for the next. Only ISAs that you pay into each tax year can be continued. Your provider would need to you reapply to subscribe to the ISA, or open a new ISA, if there is a tax year where you do not pay anything in. They may close an unfunded ISA after a period of time because most have a minimum opening balance to be funded with either new money or a transfer. An ISA may not be considered fully opened until a balance is applied to it.

Why would you not just open your ISA in the next tax year when you are able to fund it immediately? Chip is currently offering a flexible ISA paying 5.10%, which will probably still be around in a month's time.

BIB
Normally I’d agree & I’m just musing really😊   

VM are currently offering an Exclusive FRISA @ 5.25% with a funding window of 30 days (from product withdrawal) which takes us into 2024/25. I don’t envisage them asking for a renewal declaration, but who knows. 

Actually it seems there is an exception made for this scenario, so when the first year's subscription is not made the application can be carried over to the following tax year. Of course subject to the terms of the provider.

https://www.gov.uk/guidance/information-you-need-from-investors-when-they-apply-for-an-isa

It is therefore only subsequent gaps that would break the validity of the original application to subscribe.

chutuk

badger09 said:

masonic said:

There seems to be a fundamental misunderstanding underpinning your entire post. Namely, that there is no limit to the number of ISAs you can open.

So it does not matter whether or not you opened an ISA during this tax year. It is always possible to open another (but sometimes pointless to do so). 

Any ISA that you do not fund during one tax year is not valid for the next. Only ISAs that you pay into each tax year can be continued. Your provider would need to you reapply to subscribe to the ISA, or open a new ISA, if there is a tax year where you do not pay anything in. They may close an unfunded ISA after a period of time because most have a minimum opening balance to be funded with either new money or a transfer. An ISA may not be considered fully opened until a balance is applied to it.

Why would you not just open your ISA in the next tax year when you are able to fund it immediately? Chip is currently offering a flexible ISA paying 5.10%, which will probably still be around in a month's time.

BIB
Normally I’d agree & I’m just musing really😊   

VM are currently offering an Exclusive FRISA @ 5.25% with a funding window of 30 days (from product withdrawal) which takes us into 2024/25. I don’t envisage them asking for a renewal declaration, but who knows. 

Thanks, I had seen this and think this is what lead me to start looking.  The VM exclusive FRISA is not really a consideration for me though at the moment. Reason being is I need this new isa to be easy access and flexible.  Also my existing FRISA is with Virgin and is already over the FSCS threshold so would like to diversify a bit where possible. 

badger09

masonic said:

badger09 said:

masonic said:

There seems to be a fundamental misunderstanding underpinning your entire post. Namely, that there is no limit to the number of ISAs you can open.

So it does not matter whether or not you opened an ISA during this tax year. It is always possible to open another (but sometimes pointless to do so). 

Any ISA that you do not fund during one tax year is not valid for the next. Only ISAs that you pay into each tax year can be continued. Your provider would need to you reapply to subscribe to the ISA, or open a new ISA, if there is a tax year where you do not pay anything in. They may close an unfunded ISA after a period of time because most have a minimum opening balance to be funded with either new money or a transfer. An ISA may not be considered fully opened until a balance is applied to it.

Why would you not just open your ISA in the next tax year when you are able to fund it immediately? Chip is currently offering a flexible ISA paying 5.10%, which will probably still be around in a month's time.

BIB
Normally I’d agree & I’m just musing really😊   

VM are currently offering an Exclusive FRISA @ 5.25% with a funding window of 30 days (from product withdrawal) which takes us into 2024/25. I don’t envisage them asking for a renewal declaration, but who knows. 

Actually it seems there is an exception made for this scenario, so when the first year's subscription is not made the application can be carried over to the following tax year. Of course subject to the terms of the provider.

https://www.gov.uk/guidance/information-you-need-from-investors-when-they-apply-for-an-isa

It is therefore only subsequent gaps that would break the validity of the original application to subscribe.

Thanks for the research. I had to go out. 

That’s just as I thought and potentially very useful to me.