Full ISA Guide Discussion Area

Martinslovechild

There seems to be some confusion about the amount which can be sheltered in an ISA.

Many people talk about depositing the "full" £5340 (in 2011/12) or £5640 (in 2012/13) when this accounts for only half the annual ISA allowance.

Individuals can place £11,280 annually into a Stocks & Shares ISA. Of this amount, up to half may be placed into cash. Alternatively, all £11,280 may be placed in unit trusts, ETFs or individual shares.

It should be noted that shares historically achieve annual returns of around 9% in the long-term whereas Cash ISAs have failed to keep up with inflation which means that their value continually erodes in real-terms.

david78

Gemsie wrote: »

I have money in an ISA account for the current tax year, but haven't used my full entitlement. Next year, do I just keep placing more money in that same account or do I have to start a new one up? Thanks!

You don't have to start a new one. You can just add this years money to your own account if you want. The only exception is if your old one was a fixed rate account, in which case a new cash ISA would normally need to be opened.

RobinXe

Hi guys, this is my first post and I'm hoping someone can clear something up for me:

I've read through the guides and thread, and think I've understood, but for confirmation, am I right in thinking that I can transfer my ISA savings from previous years into a new account (in order to get a better rate) and also open a separate new account (new money only, better rate than the transfers-in account) into which I can pay my current year's ISA allowance; i.e. can I open more than one ISA in a tax year, provided I only pay new funds into one of them?

Thanks for your help!

VoucherMan

RobinXe wrote: »

I've read through the guides and thread, and think I've understood, but for confirmation, am I right in thinking that I can transfer my ISA savings from previous years into a new account (in order to get a better rate) and also open a separate new account (new money only, better rate than the transfers-in account) into which I can pay my current year's ISA allowance; i.e. can I open more than one ISA in a tax year, provided I only pay new funds into one of them?

Yes.

Exactly what I've done. I've transferred last years ISA into the Halifax 3 year fixed rate, and I'm opening a new flexible one for anything I want to save this year.

nickyotron

Hi peeps.
Interest earnt on last years cash ISA, wont count towards this years allowance, will it? ..

Secondly, if a standing order for last years cash ISA carrys on, paying £x into it, is this effectively eating into this years allowance. Meaning I CANT open another cash isa this year ?..(Or can I still open a new cash ISA while old standing order feeds old Isa)... Thanks peeps. :eek:

psychic_teabag

nickyotron wrote: »

Hi peeps.
Interest earnt on last years cash ISA, wont count towards this years allowance, will it? ..

No. (Well, to be pedantic, not unless you arranged for the interest to be paid out to a separate account and then paid it back in. But you wouldn't do that...)

Secondly, if a standing order for last years cash ISA carrys on, paying £x into it, is this effectively eating into this years allowance. Meaning I CANT open another cash isa this year ?..(Or can I still open a new cash ISA while old standing order feeds old Isa)... Thanks peeps. :eek:

It's your allowance, rather than an ISA account, that is tied to tax years. So if you have paid in since April 6th, last year's ISA is now also this year's ISA. So you're correct, you cannot pay new money into a different cash ISA. (You can actually open another one, just can't pay new money into it. You can transfer an existing ISA into it, for example.)

What you need to do is check the interest rate on your ISA. If it's still competitive, no problem. If it's now a year old, it's probably no longer competitive so you should transfer it. Or you might be able to contact your current provider and ask them to redesignate it as a newer model - Halifax have an online form to do that, not sure about others.

If it has a bonus that will expire soon, I'd be tempted to transfer it now, while rates are good. If you wait until, say, July, the rates might not be as good then. (They might be better than now, but then you can transfer again.)

nickyotron

Thanks psychic teabag thats cleared years of wondering up lol ty.

Freelancing_novice

I'm just starting out as a freelancer and working out the best way of putting aside money each month in preparation for the tax bill at the end of the year. I don't have a lump sum to invest now, but I want to keep on adding to it - can I do that with an ISA, or should I be looking at a fixed rate savings account? At the moment I bank with HSBCand they offer a 2.75 rate. Thanks!

psychic_teabag

No, a fixed-term account is no good since you (usually) can't add to them after opening. Would need to be instant-access or regular-saver.

An ISA is better used for long-term savings if possible, to benefit from the year-on-year tax savings. But obviously if you wouldn't be using your ISA allowance otherwise, go ahead and use it.

An alternative is a regular-saver - 4% is easy, and after basic-rate tax beats many ISAs. Can get up to 8% in a regular saver, but the higher interest tends to mean more constraints on deposits and/or withdrawals. I like the Monmouthshire BS flexible saver for flexibility - "only" 4% though.

See https://forums.moneysavingexpert.com/discussion/608697

sparrer

I know the answers are here somewhere but I just can't find them - I would make a lousy detective! So -

a) can anyone open an ISA for another adult
b) can anyone pay money into an adult's ISA or does it have to be the account holder?

Tia