Full ISA Guide Discussion Area

happyandcontented

masonic said:

happyandcontented said:

New to ISA's but have a TFLS of C 300k to invest which needs to be relatively accessible for property purchase in a couple of years. If we weren't looking to do this we would leave it in the pension wrapper.
We already have c 80k in Marcus.
We are a couple,  one soon to be a non taxpayer, and the other is a high rate taxpayer (I am not sure if that is relevant)
Any pointers for our max 40k per tax year?
Any recommendations where to place the remainder of the funds? NSI/Premium Bonds

Depending on the soon-to-be non-taxpayer's other income, all of the savings could be put in their name and the interest would be tax free. This means a cash ISA should only be considered if the interest rate is equivalent or better than the equivalent rate in a normal savings account. You would normally need to split across 4 institutions if you wished to remain under the FSCS compensation limit at each, but at the moment NS&I is offering the best easy access rate and is backed by HM Treasury, and it beats all of the 1 year fixed rate accounts, so could fit the bill for the whole amount. Interest would be just under £3.5k per year.

Thank you. So the 85k limit is not applicable to the NS&I?

If we took the TFLS out rather than taking a tax-free portion as a monthly income drawdown would that be more beneficial when the LTA tax is due to be calculated in that the tax is due on growth so removing the lumps sum would leave less in to grow, or is that too simplistic?

hstrug

Another person who feels like they're asking a silly question but want to check out before I make a decision. I think I'm ok though...

I have a H2B ISA to save money for our deposit (don't ask why husband doesn't have one too - it was so long ago now I can't remember our reasoning!)

The H2B is currently at just over 14k. (I know this isn't ideal as it's over the 12k max for bonus so isn't earning good interest)

Unfortunately I have paid 1200 in this financial year.

We have been talking about finances and have decided it would be in our interests to each open a LISA to maximise the benefits available to us.

What is the best way to do this? We'll use the best buy in the MSE guide for LISA. Would it be OK to withdraw all 14k and use 4000 each to max out the LISAs on opening? I am assuming this would be OK... 14000 (current ISA balance) + 4000 (max amount used to open LISA) = 18000 so it's under my 20k ISA allowance as the other 4000 would be in my husband's allowance... or would it be best to withdraw 4000 to put into husbands LISA and then get the banks to transfer 4000 as a balance to my LISA? I want to make sure we do the right thing... Will also be looking at the best place to store the remainder amount while we wait for new ISA allowances in April.

Thanks in advance if anyone is still lurking around these parts!

masonic

You won't have paid all £14k into the HTB ISA during this tax year, so if it's your only ISA, then you'll have far more headroom in your annual allowance.

Unless you'll be contributing more than £16k to other ISAs in future tax years, the easiest option is to self-transfer from HTB ISA to LISA. This is the only choice when transferring between different individuals.

Obviously taking this action means you would need to wait at least a year before each LISA could be used.

hstrug

Thank you so much for your reply @masonic - I thought it would only be the money paid in this year but needed to double check.

I take it i can self transfer within a tax year? And re waiting a year before LISAs can be used - do you mean because its standard or because of the self transfer? 

masonic

hstrug said:

Thank you so much for your reply @masonic - I thought it would only be the money paid in this year but needed to double check.

I take it i can self transfer within a tax year? And re waiting a year before LISAs can be used - do you mean because its standard or because of the self transfer? 

You can self transfer at any time providing you haven't already used >£16k of your annual allowance at that time. Self transfers will consume additional ISA allowance, which isn't a problem if it won't be used otherwise.

All LISAs must have been open for a full year before they can be used towards a house purchase.

MiserlyMartin

I couldn't find the answer to this question.. I can't remember for sure if I paid into any ISA in this tax year. I have a lot of ISAs dotted around and this year I've been transferring them like crazy to get the top rates, sure, with old money. Looking at what I have I don't think I did pay in, but something was telling me before in my mind that I had.

Should I just pay into an ISA with new money and to hell with it? What happens if I did already, does the money bounce back? Is there an HRMC flag? A few old ISAs are telling me I have the full limit available to pay in but how do they know I haven't used it up with other providers?

masonic

MiserlyMartin said:

I couldn't find the answer to this question.. I can't remember for sure if I paid into any ISA in this tax year. I have a lot of ISAs dotted around and this year I've been transferring them like crazy to get the top rates, sure, with old money. Looking at what I have I don't think I did pay in, but something was telling me before in my mind that I had.

Should I just pay into an ISA with new money and to hell with it? What happens if I did already, does the money bounce back? Is there an HRMC flag? A few old ISAs are telling me I have the full limit available to pay in but how do they know I haven't used it up with other providers?

To be sure, you'd need to survey all of your ISAs to see if any of them have a reduced available allowance. HMRC won't find anything out until after the end of the tax year. If you did subscribe to two different cash ISAs, then they would eventually write to you to tell you what action they would take (generally they'd let you off for a first offence, or void the subscriptions to the second cash ISA you paid into if you were a repeat offender - that means money removed and interest that accrued while in the ISA treated as taxable).

Consumerist

MiserlyMartin said:

. . . Should I just pay into an ISA with new money and to hell with it? What happens if I did already, does the money bounce back? Is there an HRMC flag? A few old ISAs are telling me I have the full limit available to pay in but how do they know I haven't used it up with other providers?

Since it's only the payment-in of 'new' money you're looking for, I would suggest checking your current account(s) and standard savings accounts to look for payments-out during this tax year.

ESMnew500

I'd be really grateful if somone could answer one very simple question

I have read tonnes of guides on cash ISAs but they all talk about how you can 'save' up to £20k a year - none of them explain in clear language if you can add to that or if you can only save £20k in total in a cash ISA

so my question is: can I only ever have up to £20k in a cash ISA or, if i put £20k in one year and add £20k the next year, do I then have £40k of tax-free savings?

Doc_N

ESMnew500 said:

I'd be really grateful if somone could answer one very simple question

I have read tonnes of guides on cash ISAs but they all talk about how you can 'save' up to £20k a year - none of them explain in clear language if you can add to that or if you can only save £20k in total in a cash ISA

so my question is: can I only ever have up to £20k in a cash ISA or, if i put £20k in one year and add £20k the next year, do I then have £40k of tax-free savings?

You can’t add to an ISA with £20k in it. But you can open another one in the following tax year. That will give you the £40k you mention. Provided of course that the cash ISA still exists, and that the limit hasn’t - as is being suggested - been reduced.