MSE News: New tax year means new Isa year

Former_MSE_Helen · 7 April 2011 at 9:09AM

This is the discussion thread for the following MSE News Story:

" The new tax year starts today meaning everyone gets a new, tax-free £5,340 cash Isa allowance. But don't delay using it ..."

Read the full story:
New tax year means new Isa year

Valor · 7 April 2011 at 10:07AM

"You can open another account to transfer money from old Isas."

This used to be true, but it seems that this year the banks have a new trick.

When I tried to open a new ISA to transfer my old one into, I was forced to put £1 into it. This £1 forms part of my ISA Subscription, so this meant that:

a) I couldn't do this in advance of April 6th (as my 2010/11 Subscription was full)
b) I can't open two ISA's in the same tax year, as with this method both would be "subscribed" to, which I believe is against the rules.

So the most profitable way for me to save used to be two ISA's, one at ~3.5% for new subscriptions, and one at ~3.0% for transfers, but this seems to no longer be the case.

Now I'm forced to choose between leaving my old ISA at it's 0.5% rate and opening a new one at 3.5% (but no transfers) or opening a new one at ~3.0% and being able to transfer into it.

I tried this with Santander and Halifax, both had this new £1 requirement.

Have I gone mad this year? or have the banks just got a little bit cleverer?

Cheers,

Val.

System · 7 April 2011 at 10:10AM

I applied for my 2011-12 ISA yesterday, to get as much interest as possible for the tax year.

I went for the NatWest e-ISA because it doesn't have an introductory bonus and pays interest monthly and you can transfer in funds from other accounts, and it is instant access. Interest starts at 2% AER rising to 2.5% AER when over £30K

I know there are better interest rates, but they have introductory bonuses, or fixed terms with penalties for withdrawals (close account) or are with an organisation which I would not trust. (Satan...der)

so I went with the option that best fits my needs.

System · 7 April 2011 at 10:14AM

Valor wrote: »

This used to be true, but it seems that this year the banks have a new trick.

When I tried to open a new ISA to transfer my old one into, I was forced to put £1 into it. This £1 forms part of my ISA Subscription, so this meant that:

If you opened the ISA using an online application, then many of the banks have simplified the application form and you do have to enter a minimum of £1

A.F.A.I.K. - you then complete the ISA transfer form (once the account paperwork arrives) and you do not need to deposit the £1 - hence you have not used up your allowance and can open another account.

This is what I was informed when I asked the bank's online chat.

Niksan · 7 April 2011 at 10:26AM

Odd, I opened an ISA with Halifax on the 5th and didn't need to fund it, I would however need to fund it to get the big rate, then again, with nothing in it, it doesn't really matter what the rate is. Unless I'm missing something?

Leothecat · 7 April 2011 at 10:45AM

Valor wrote: »

This used to be true, but it seems that this year the banks have a new trick.

When I tried to open a new ISA to transfer my old one into, I was forced to put £1 into it. This £1 forms part of my ISA Subscription, so this meant that:

a) I couldn't do this in advance of April 6th (as my 2010/11 Subscription was full)
b) I can't open two ISA's in the same tax year, as with this method both would be "subscribed" to, which I believe is against the rules.

So the most profitable way for me to save used to be two ISA's, one at ~3.5% for new subscriptions, and one at ~3.0% for transfers, but this seems to no longer be the case.

Now I'm forced to choose between leaving my old ISA at it's 0.5% rate and opening a new one at 3.5% (but no transfers) or opening a new one at ~3.0% and being able to transfer into it.

I tried this with Santander and Halifax, both had this new £1 requirement.

Have I gone mad this year? or have the banks just got a little bit cleverer?

Cheers,

Val.

This is exactly the question I came to ask. I have just just opened the Halifax ISA but not yet funded the account nor filled in the ISA transfer form. I don't really understand ISAs but it suddenly occurred to me that perhaps doing what you have outlined above, might be possible. So I came here to ask the question.
Any advise very very gratefully received!

TIA

Lokolo · 7 April 2011 at 11:00AM

Leothecat wrote: »

This is exactly the question I came to ask. I have just just opened the Halifax ISA but not yet funded the account nor filled in the ISA transfer form. I don't really understand ISAs but it suddenly occurred to me that perhaps doing what you have outlined above, might be possible. So I came here to ask the question.
Any advise very very gratefully received! TIA

Whats your question exactly?

spikyone · 7 April 2011 at 12:33PM

Valor wrote: »

This used to be true, but it seems that this year the banks have a new trick.

When I tried to open a new ISA to transfer my old one into, I was forced to put £1 into it.

Valor wrote: »

I tried this with Santander and Halifax, both had this new £1 requirement.

I have both of these and didn't have to deposit anything immediately.

Although Halifax say you have to credit £1, a transfer-in counts towards this. And their requirement is that you deposit within 28 days for either transfers or deposits - see the summary box tab here. So it would've been fine to open the account in the 2010/11 tax year for the current year's allowance or to transfer.

Santander seem to have no consistency (maybe as a result of being B&B, A&L, Abbey, etc, maybe just because their service is apparently poor), but I went into my local branch on April 1st - yes, I know - and managed to open an account without depositing. They don't accept transfers on any account with a decent rate anyway.

Since both these accounts are still available you haven't missed out, but it's still worth knowing for next ISA season I guess.

Leothecat · 7 April 2011 at 5:15PM

Lokolo wrote: »

Whats your question exactly?

Sorry that was very unclear.....:o
Ok I have this morning opened a Halifax ISA and was going to transfer from 2 previous years' Abbey accounts into this new one @3%. I was also going to fund this new account with this years Isa allowance.

It then occurred to me that perhaps I could open a new Santander Isa @ 3.5% and not contribute any new money into the Halifax Isa. Instead I would put my full years Isa allowance into the Santander Isa.

My question is:
Can I open 2 Isa in 1 year, transfer old money into 1 of them and fund the other with new Isa allowance?

Thanks!

Lokolo · 7 April 2011 at 5:19PM

Leothecat wrote: »

Sorry that was very unclear.....:o
Ok I have this morning opened a Halifax ISA and was going to transfer from 2 previous years' Abbey accounts into this new one @3%. I was also going to fund this new account with this years Isa allowance.

It then occurred to me that perhaps I could open a new Santander Isa @ 3.5% and not contribute any new money into the Halifax Isa. Instead I would put my full years Isa allowance into the Santander Isa.

My question is:
Can I open 2 Isa in 1 year, transfer old money into 1 of them and fund the other with new Isa allowance?

Thanks!

Yep yep yep.

The Halifax one you opened this morning - you haven't put any money into this? (i.e. its £0 balance)

If if it £0. You need to follow the rest of these instructions:

http://www.halifax.co.uk/savings/accounts/cash-isas/transfer-your-isa/

You've obviously done Step 1, so just onto Step 2

Leothecat · 8 April 2011 at 9:22AM

Thanks Lokolo! I was hoping you would say that

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