Help sorting out ISAs - What Do I Do Now?

CashFlowCaptain

I opened an ISA with Halifax many years ago and forgot about it. Right now it shows as an ISA Saver account with £1100 in it and earning interest at 1.1%.

Today I opened a new ISA with Nationwide and transferred in £20k of savings.

I want to maximise my tax free savings so my understanding is that my wife can also create a £20k ISA before April 5th.

Our intention therefore is to open my wife's £20k ISA, then after April 5th we can both open another new ISAs up to £20k each in the new financial year.

If I am correct so far, my only question is about the £1100 in Halifax, can I just move that to a standard savings account so my wife can create a £20k ISA? When I try to do that in the Halifax app I get a warning that "any amount you withdraw will be added to the displayed remaining allowance figure (of £20000) for this tax year" - and this is confusing me.

PeskyBlunder

You could ask Nationwide to do an ISA transfer from Halifax - this won't count as "new" money. You must ask Nationwide to do the transfer though - don't try to do it yourself.

jimjames

alistairgd said:

I opened an ISA with Halifax many years ago and forgot about it. Right now it shows as an ISA Saver account with £1100 in it and earning interest at 1.1%.

Today I opened a new ISA with Nationwide and transferred in £20k of savings.

You need to be very careful with terminology. You didn't transfer £20k to the ISA, you paid in £20k of money from outside it. An ISA transfer is a very specific process where you can move money from one ISA to another without losing the tax free status. If you request an ISA transfer you should be able to get the £1100 from your old ISA to the new Nationwide one and maintain it as an ISA so you don't lose that part of your allowance. If you withdraw and pay into another ISA in your wife's name then you'll lose that £1100 from her allowance this year.

Adding £20k each in the new tax year is a good way to maximise your tax free savings.

pete146uk

alistairgd said:

I opened an ISA with Halifax many years ago and forgot about it. Right now it shows as an ISA Saver account with £1100 in it and earning interest at 1.1%.

Today I opened a new ISA with Nationwide and transferred in £20k of savings.

I want to maximise my tax free savings so my understanding is that my wife can also create a £20k ISA before April 5th.

Our intention therefore is to open my wife's £20k ISA, then after April 5th we can both open another new ISAs up to £20k each in the new financial year.

If I am correct so far, my only question is about the £1100 in Halifax, can I just move that to a standard savings account so my wife can create a £20k ISA? When I try to do that in the Halifax app I get a warning that "any amount you withdraw will be added to the displayed remaining allowance figure (of £20000) for this tax year" - and this is confusing me.

Everything you have said is correct.  You can both invest £20k before April, and then another £20k each from April.

If you withdraw the £1100 to any type of account, you will lose your tax free status on it.  IE if you are in a position that you have to pay tax on your interest, the interest on this £1100 will be included in that tax bill.  If you withdraw it and then invest it into an ISA, then it will form part of your £20,000 allowance - so you could only invest another £19,900 in the tax year.

The other way would be to do an ISA transfer into you r new Nationwide ISA.  That way it will retain your tax free status, and will not eat into your ISA allowance for the year.

Bobblehat

pete146uk said:

alistairgd said:

I opened an ISA with Halifax many years ago and forgot about it. Right now it shows as an ISA Saver account with £1100 in it and earning interest at 1.1%.

Today I opened a new ISA with Nationwide and transferred in £20k of savings.

I want to maximise my tax free savings so my understanding is that my wife can also create a £20k ISA before April 5th.

Our intention therefore is to open my wife's £20k ISA, then after April 5th we can both open another new ISAs up to £20k each in the new financial year.

If I am correct so far, my only question is about the £1100 in Halifax, can I just move that to a standard savings account so my wife can create a £20k ISA? When I try to do that in the Halifax app I get a warning that "any amount you withdraw will be added to the displayed remaining allowance figure (of £20000) for this tax year" - and this is confusing me.

Everything you have said is correct.  You can both invest £20k before April, and then another £20k each from April.

If you withdraw the £1100 to any type of account, you will lose your tax free status on it.  IE if you are in a position that you have to pay tax on your interest, the interest on this £1100 will be included in that tax bill.  If you withdraw it and then invest it into an ISA, then it will form part of your £20,000 allowance - so you could only invest another £19,900 in the tax year.

The other way would be to do an ISA transfer into you r new Nationwide ISA.  That way it will retain your tax free status, and will not eat into your ISA allowance for the year.

I think you mean £18,900.

CashFlowCaptain

Hi folks

Many thanks for the advice.

"The other way would be to do an ISA transfer into you r new Nationwide ISA.  That way it will retain your tax free status, and will not eat into your ISA allowance for the year."

That's the bit I was not sure of.

I will go into Nationwide tomorrow and ask them to transfer the Halifax ISA into my new Nationwide ISA. 


Thanks again!