Full ISA Guide Discussion Area

claire111

Hi

I have a Cash ISA fixed rate with Nationwide opened in July 2010 with £2,500.

The lady at the till in Nationwide told me today that I cannot put any more funds into that ISA (presumeably as it's fixed rate and not now available ?) BUT that I can open another ISA with Nationwide and contibute the remaining £2,600 for this years allowance.

She said I couldn't go to another provider to do this, that I could only do it with Nationwide.

Is this right ?

Thanks for any advice

achan891

Much as I like Martin’s “cake” analogy for ISAs, I’ve found another mental image really useful in thinking about how ISAs work. This way of thinking about it has really helped me; I thought others might find it useful too!

Each ISA account is like an inward post-box slot that goes through a gigantic wall. On the other side of the wall is a magical tax-free land. As long as the money stays on the OTHER side of the wall, it earns interest tax-free. The minute it comes back through the wall into normal tax-land, you have to start paying tax on any interest again.

You are allowed to put up to £5100 through a SINGLE post-box slot in any one tax year. When you reach the limit in any one tax year, all the INWARD slots close up and you can’t put any more money into tax-free-land The money needs to all go in through the same slot (i.e., into the same account). It doesn't matter if this is a new slot, or one you've used previously - all that matters is that the total amount going through the wall INTO tax-free land is less than or equal to £5100 and that you put it all through the same slot. So each year, you can apply to open a new slot (account) or you can just add money to ONE of your existing accounts through an existing slot.

At any time, you can move the money around ON THE OTHER SIDE of the wall (e.g., to maximise your interest rate) by 'transferring' money from one ISA to another. (This might involve merging all your slots into one, for example.) The key thing is: as you move the money around, don't bring it back into tax-land!! Keep it on the other side of the wall in tax-free-land, so you can build up the total amount of money that you have in that magical place! To move it around on the other side, use 'ISA transfer' forms from your bank.

You can, of course, bring money back into normal tax-land if you want to spend it (barring any fixed term etc on the account). But the £5100 restriction is on the total amount of money that you put IN through the slot in any one tax year. No-one's looking at how much you bring OUT of tax-free land, only the amount you put IN. So if you put £5100 through each year for two years, you'll have £10,200 (plus accrued interest) on the OTHER side of the wall, all earning interest tax-free (until you bring it back into tax-land). But if you put £5100 through a slot this tax year, and then take £5000 of it out (maybe to put it into a normal non-ISA savings account on the taxed side of the wall) then put another £5100 through a slot in the next tax year, you'll only have £5200 on the tax-free side, earning interest tax-free. And you can't put the original £500 back, because the slots have been checking how much you've put IN this tax year, and when they got to £5100, they closed up until the end of the tax year! The point is to leave as much money as possible in tax-free-land on the OTHER side of the wall (even if you shuffle it around on the other side) for as long as possible so as to earn as much tax-free interest as possible...

Alias_Omega

Is it possible to have an ISA, then open an e-ISA with the same bank..?

Are you still limited to the £5,100 per year.?

What happens if you deposit more than the £5,100 into the accounts for the year.?

grunk

I've been at my company long enough to have the opportunity to exercise some share options. I also haven't used up my stocks and shares ISA allowance for this year.

So I was wondering is there any way that I can put money into an ISA fund then use this money to exercise my options?
So that if, in years to come, the company does reasonably well I can sell them on without a tax hit?

neighbourly

Wonder if anyone can advise me I have a Self invested stocks & shares ISA & was wondering if I sell a share the money will go into the wrapper, my question is can I then reinvest in an other share or do I have to take the cash out?

Any help will be appreciated.

N

grunk

You can re-invest.

The wrapper is tax free as you have already paid income tax on it before you put it into your ISA.

Once the money is in the wrapper, you can buy and sell to your hearts content, without having to pay any tax on your profits. You are only limited on how much of your income you can put in each year.

la55zlo

Apologies if this has been answered somewhere else.

I was wondering whether anyone could confirm the coverage and limitations of the FSCA compensation scheme with regards stocks and shares ISAs.

The FSCA website states a £50k limitation per firm in default, so I'm reading this to mean that regardless of the portfolio value of your stocks and shares ISA, your compensation limit per ISA provider would only be £50k.

Can anyone confirm whether this is correct?

Thanks in advance

geordiemick

I have Scottish Widows unit trust isa,managed, uk growth and also global growth. for 11 years and its done nothing.
Also have L& G lump sum ISA, tracker, done much better.
Can I, should I transfer. Will Scot Wid charge me?

Ladyhawk

I am sure this has been covered before so my apologies to asking this question.

I took out an ISA earlier this year and put £500 in it with plans to add to it throughout the year and to transfer my other ISA's into it.

Within weeks of my opening it I tried to transfer the other ISA's into it but they were returned to me with a note saying that that ISA is now closed to additional funds.

I'm under he impression that I cannot add to my old ISA's, and cannot open a new ISA so I feel like I have missed out on a substantial tax benefit.

Do I have any options?

Thank you and feel free to point me to another thread if this has been covered elsewhere.

blueberrypie

Ladyhawk wrote: »

I am sure this has been covered before so my apologies to asking this question.

I took out an ISA earlier this year and put £500 in it with plans to add to it throughout the year and to transfer my other ISA's into it.

Within weeks of my opening it I tried to transfer the other ISA's into it but they were returned to me with a note saying that that ISA is now closed to additional funds.

I'm under he impression that I cannot add to my old ISA's, and cannot open a new ISA so I feel like I have missed out on a substantial tax benefit.

Do I have any options?

Yes. Open a new ISA without funding it, transfer the £500 from your current 10/11 ISA into it. Transfer the funds from your other ISAs into it too, if you want. Then you can add the remainder of your 10/11 allowance.

Make sure you choose an ISA which a) allows transfers in and b) allows funds to be added at a later date (many fixed-rate ISAs don't - they are "one deposit only").