Transfer Cash ISAs Discussion Area

achan891

I have accidentally ended up depositing £300 into my 2009-10 firstdirect ISA account past the end of the tax year... I had a standing order set up to pay into the account on the 3rd of each month, but the bank holidays over Easter messed this up and resulted in the payment only going in on 6 April (despite assurances from the bank on the phone on 5th April that this wouldn't happen - very annoying!!).

I think this means that I missed out on £300 of my 2009-10 allowance (grrrrr!) and that this £300 payment on 6 April counts towards my new allowance for 2010-11 - yes?

I really don't want to stick with this account for the rest of the tax year if possible, because the rate is going to drop at the end of the month. But presumably the accidental deposit means that I can't take advantage of any 'new money' offers but only 'transfers allowed' accounts.

So my question is this: Am I allowed to close this account and transfer all of it (i.e., all of my 2009-10 deposits, plus the £300 that I have already deposited in the current tax year) to another provider next month? Or does this one accidental deposit on 6 April mean that I have to wait until April 2012 (and suffer the low interest rate in the meantime) before I can transfer it?

Thanks in advance for your help!

Pmarmalade

I have done some more reading and now I think I have a better understanding! Is this right?

"New money" ISAs that don't allow transfers can have a max of £5,100 paid in this year.

ISAs that allow transfers can have £5,100 paid in this year but also transfers from previous years, so in theory you could be earning interest on £5,100 for this year plus £3,600 from last year in a single ISA?

So if I was to start maxing out my ISA allowance every year, in ten year's time I could have £51,000 + interest all earning tax free in a single ISA if I transfer every year?!

Lokolo

Pmarmalade wrote: »

I have done some more reading and now I think I have a better understanding! Is this right?

"New money" ISAs that don't allow transfers can have a max of £5,100 paid in this year.

ISAs that allow transfers can have £5,100 paid in this year but also transfers from previous years, so in theory you could be earning interest on £5,100 for this year plus £3,600 from last year in a single ISA?

So if I was to start maxing out my ISA allowance every year, in ten year's time I could have £51,000 + interest all earning tax free in a single ISA if I transfer every year?!

YES YES YES

You don't have to transfer the money to get it all earning tax free. The interest is always tax free, just interest rates tend to drop a lot on older accounts, so to get the most, you transfer it to a better paying one.

You will also have a lot more than £51k as interest, which stays in ISA, also gives tax free interest.

djhworld

I was thinking of transferring my ISA to a different provider (I have a HSBC cash e-ISA that currently pays 1.7% interest - side note: why is it so hard to find your current rate of interest on the account?)

So when this little tidbit arrived into my eyes when reading MSE: -

Can I still add money to last year's? No. Try and put more in & it counts as opening this year's ISA with that provider.

....a huge pang of regret hit me.

I'm 22 years old, graduated two years ago, so haven't had the chance to save up the full "cash allowance" meaning I save £25 a week via standing order.

HSBC took my £25 contribution on the 6th April 2010, meaning that I've effectively locked myself in for another year - am I right?

Pmarmalade

Lokolo wrote: »

YES YES YES

You don't have to transfer the money to get it all earning tax free. The interest is always tax free, just interest rates tend to drop a lot on older accounts, so to get the most, you transfer it to a better paying one.

You will also have a lot more than £51k as interest, which stays in ISA, also gives tax free interest.

Thank you! What happens to your account after the year is up is what most ISA guides don't explain all too well.

GJH2

I recently opened a cash ISA for myself and my wife, at the same time requesting money be transferred in from two other existing providers. The first was Alliance Leicester, (a wholly owned company of Santander), I noted the money disappear from this account and the following day I received letters from them confirming the money had been transferred to Santander. It took 7 days to appear in the new ISA'S, under the heading "cheque paid in at banking centre". Where was more than £7500.00 for 7 days, am I to believe that someone actually wrote out a cheque and posted it to another part of company? I don't think so!! The second ISA was transferred from Natwest, the transfer took longer to initiate, but took just 24 hours to appear as a web transfer.
I would also like to add that I opened an E Banking account the same time as the ISA's, (as a result of information gleaned from Martins Money). My wife has her state pension paid into this account, her pension is paid on a Monday but doesn't appear until Wednesday. Mine appears in my Nationwide account on the day it is due.
" Moral of the story" They might offer some of the best rates but they clearly claw some back by holding my money, I would guess illegally!!

Inforapennyinforapound

Martins website is very wise,but regarding the above statement think very carefully.

My A & L isa rate is going down to .5% (there is less than £5100 in it).

What to do?

Ok i could transfer to another A&L isa paying 2% OR open a new A&L isa currently offering 3.2%.
This isa does not allow transfers in so i closed the .5% isa .I have got the cash in my current account and will put it in the 3.2% account.

So i have got round the 'no transfers in ' rule by closing the low paying account.

Do others agree that Martins statement is not always strictly correct,especially if you hold less than the maximum?
It is certainly not true in my case.

KTF

The disadvantage of withdrawing means that you have lost that tax free allowance forever so instead of being able to gain interest on last years allowance plus this years, you can now only gain interest on this years allowance.

Just because you have not maxed the ISA out is no reason not to transfer it to a better rate and/or combine it with this years allowance.

Also, just because you have an existing A&L ISA doesn't mean that you have to transfer it to only another A&L product, you can move it to anyone you want.

Inforapennyinforapound

KTF,yes i agree up to a point.Maybe i am not in a position to add any/much more to it this tax year?

Therefore i am now earning 3.2% on this money and not the measley 2% in A&L direct isa issue 6.

I do intend to max it to £5100 so i was left with either earning 2% in one isa and 3.2% on another £2000 in the new isa OR earning 3.2% on the full allowance.

I still think my idea is valid.

DUS

a

Inforapennyinforapound wrote: »

So i have got round the 'no transfers in ' rule by closing the low paying account.

Do others agree that Martins statement is not always strictly correct ...

Well, I agree with Martin´s and KTF´s comments. You somewhat got around the no-transfer-in-clause but at the costly expense of losing your new/additional allowance for the current tax year.

So, unless you have/had no plans of adding fresh money into a 2010/11 cash ISA (or to be precise, if you had no intention of adding more fresh money than 5.100 - the money now "transfered" via the current account), then I would say that your decision was not the best.

But as always, others might disagree with me.
DUS