My First ISA...

[cj_eds]

Just browsing through some ISA's for the first time.

Santander and Alliance & Leciester's ISA's offer 2% up to £9k and then 2.75% above that. Am I right in thinking that since the tax free limit is £3600, the 2.75% is bull since it'll be taxed? So its really 2% up to £3600, then 1.6% from £3601 to £9000 since Darling Brown will want their cut, then likewise only 2.2% above the £9k?
Doesn't make it easy to compare at a glance, comparing the AER, gross & net and then their equivalents with or without tax for ISAs vs other accounts.

[cbcbcb]

There's no tax on ISAs. The £3600 limit is the amount you can add to an ISA each year. The higher rates only apply to people with existing ISAs which they transfer into this account.

Since the tax year runs April-April, you can open an ISA now, and then add a further £5100 (as the limit is increased) on April 6th. That would give a total of £8700, none of which would be taxed.

[cj_eds]

That makes far more sense thanks. I did think something didn't seem right about my understanding. My assumption being you could pay in what you like, but only the first £3600 was tax free.

[condor]

If you're looking at santander then there flexible cash ISA is what you want - it guarantees to pay 3% above the B of E base rate for 12 months, ie you'll not earn less than 3.5% AER (annual equivalent rate) tax fee.

[cj_eds]

My better half has an existing ISA from a few years ago that not surprisingly is now on a crap rate. If a new one doesn't allow transfers is it legal enough to move it into your current account for a day or so then off to the new ISA? Alternatively, if she gave it to me then I moved into my ISA...

[cbcbcb]

It is legal, but is unlikely to be what you want to do.

If you withdraw money from an ISA then put it into a new ISA then it counts towards your £3600 ISA contribution limit. If you want to end up with £7200 in your ISA (£3600 from the old, £3600 new contribution) then you must transfer.

[Ribol]

cbcbcb said:

There's no tax on ISAs. The £3600 limit is the amount you can add to an ISA each year. The higher rates only apply to people with existing ISAs which they transfer into this account.

Since the tax year runs April-April, you can open an ISA now, and then add a further £5100 (as the limit is increased) on April 6th. That would give a total of £8700, none of which would be taxed.

Don't you have to be over 50 for the higher limit?

[cbcbcb]

Ribol said:

cbcbcb said:

There's no tax on ISAs. The £3600 limit is the amount you can add to an ISA each year. The higher rates only apply to people with existing ISAs which they transfer into this account.

Since the tax year runs April-April, you can open an ISA now, and then add a further £5100 (as the limit is increased) on April 6th. That would give a total of £8700, none of which would be taxed.

Don't you have to be over 50 for the higher limit?

You do this year, but for the next tax year the higher limit applies for everybody.

[Ribol]

cbcbcb said:

Ribol said:

cbcbcb said:

There's no tax on ISAs. The £3600 limit is the amount you can add to an ISA each year. The higher rates only apply to people with existing ISAs which they transfer into this account.

Since the tax year runs April-April, you can open an ISA now, and then add a further £5100 (as the limit is increased) on April 6th. That would give a total of £8700, none of which would be taxed.

Don't you have to be over 50 for the higher limit?

You do this year, but for the next tax year the higher limit applies for everybody.

Handy to know

[anonymous-user]

This thread is of interest to me to.
Is there a minimum period you can put money into a new ISA for? May possibly look at buying a property in the next 12 months, and if I did I would need to remove any funds from said ISA

[cannedheat]

guy_spyder550 said:

This thread is of interest to me to.
Is there a minimum period you can put money into a new ISA for? May possibly look at buying a property in the next 12 months, and if I did I would need to remove any funds from said ISA

Some higher rate cash ISAs have tie in periods or withdrawal terms so it may be worth reading the small print before going for the highest rate available.

Most instant access cash ISAs work just like a normal savings account, in that you can credit and debit monies as you please.

[cannedheat]

cj_eds said:

My better half has an existing ISA from a few years ago that not surprisingly is now on a crap rate. If a new one doesn't allow transfers is it legal enough to move it into your current account for a day or so then off to the new ISA? Alternatively, if she gave it to me then I moved into my ISA...

As soon as the monies are withdrawn from the ISA wrapper they cannot be re-credited unless they are treated as new monies for that tax year.

ISA monies can be transferred between providers (generally takes 30 days max) but not between people (without losing ISA status).

[Mattt]

cannedheat said:

cj_eds said:

My better half has an existing ISA from a few years ago that not surprisingly is now on a crap rate. If a new one doesn't allow transfers is it legal enough to move it into your current account for a day or so then off to the new ISA? Alternatively, if she gave it to me then I moved into my ISA...

As soon as the monies are withdrawn from the ISA wrapper they cannot be re-credited unless they are treated as new monies for that tax year.

ISA monies can be transferred between providers (generally takes 30 days max) but not between people (without losing ISA status).

Yep, Natwest 'advised' me that I could withdraw all my ISA money into my CA and open a new ISA account then stick it back in - the woman on the phone was adament that this was fine despite my attempted corrections.