ISA Questions...

"Marcus Fox" wrote in message news:PzA_d.1897$ snipped-for-privacy@newsfe3-gui.ntli.net...

Yes. Use a form provided by the the new provider, though. Don't encash it then send the cash.

Yes. They'll tell you what they need.

Rob Graham

Yes. I know because I asked the same Q yesterday :-)

I looked at the 6.25/4.35 deal, and I guess if you're disciplined enough to transfer soon after the drop (they seem to have no charges) it's a good deal. But on such small amounts of money it'd be easy to let inertia leave you at 4.35 for the rest of the year, which is pretty poor.

I've no idea what FD's normal rate is. I guess if it rises at the end of that year to something closer to the typical interest rates available elsewhere it's as good a place to bung your 6k as any.

There's reference in the blurb somewhere to credit reference agencies. I suppose with amounts of 3k or so there's not much danger of money laundering unless someone has a bundle of national insurance numbers and a lot of patience.

Andrew McP

It took me several weeks to finally transfer my money from Norther Rock to Lloyds TSB (mostly due to Lloyds incompetence), so you may lose quite a bit of interest if the transfer doesn't go smoothly.

cd

I'm sure there's plenty of scope for delays. With 3-6k involved that's not going to cost anyone a lot, but it does kind of defeat the whole point of chasing good deals in the first place.

Taking this kind of thing into consideration is one reason why I opted to stick with my own bank in the end, especially when I've left it so close to the wire. They're unlikely to drift too far from the average rate, and I'll worry more when I get over 10k in the account. This year the important thing is getting more than the 3.25%-ish I'm now getting (after tax) on my 6k Natwest e-savings.

Andrew McP

Rob graham wrote in uk.finance about: Re: ISA Questions...

But why is it that we have to go through this form-filling hassle to transfer ISAs?

It can't sensibly be anything to do with stopping people from opening multiple ISAs, because when you open an ISA, the ISA provider asks for your NI number, and I rather suspect the Inland Revenue would tend to notice a form coming in from the financial institution relating to somebody who already has an ISA assigned to that NI number.. (..if you didn't first close the first ISA)

So, why can't we just withdraw the balance, close the account, and then re-invest it in a new ISA?

If you withdraw and attempt to reinvest you are only allowed to reinvest the mini-ISA allowance for that year, i.e. 3,000 - assuming you haven't already used it.

I take your point that the Revenue should discover later that you've invested more than the maximum but nevertheless allow it because the extra came from another ISA. But I presume that they've decided that doing it the proper way means that it's less likely that a mistake would be made. Plus, how would they know that the first ISA had had the money withdrawn from it? I don't think they get returns from all the ISA providers telling them how much is in the accounts at any point in time. But I didn't make the rules so I'm only guessing.

Rob

In message , David Marsh writes

Yes, It takes them about 1.5 - 2 years to spot.

It isnt the number of ISAs that is the problem so much as exceeding the contribution limit.

E>G you could open an ISA with Bank A and put in £1k. then close it and later go to bank B with that £1,then later try to put in an extra £2k and Bank B wouldnt know that you would be exceeding the limit.

I think you are guessing right. From what I can make out, the institutions just report, at the end of the tax year, actual in-year subscription amounts and their dates, against NI numbers (as a key), plus of course mini/maxi basis of subscription and type of ISA (cash/shares/insurance).

In the case of a transfer between providers, the old provider reports the relevant current-year subscription amounts and dates to the new provider as part of the transfer, and the responsibility for reporting those details to the Revenue at the end of the tax year then lies solely with the new provider. (It also allows the new provider to enforce the ceiling on subscriptions.) The old provider has nothing to report to the Revenue, even though it might still hold funds attributable to earlier year subscriptions.

For the above to work, there is an ISA rule which says that an ISA transfer must include, as a minimum, the amount of any current-year subscriptions you have already made (and the transfer is deemed to include that current-year subscription). This avoids a person leaving a trail of subscriptions around the institutions, provided the rules have not been broken, of course.

The above model has been garnered from a particular problem I have where the old provider reported an incorrect current-year subscription amount to the new provider. This has lead to the Revenue cross-checks throwing up an exception some way down the line.