Stupid ISA questions

Shicky

Shicky

Shicky

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Belfast,Northern Ireland
Looks like i'll probably miss opening one before the new tax year so my questions are:

- If I don't get it open on time, what do I miss out on? Just having one for this current tax year and being able to add the next tax year's allowance on too? Surely no interest would gather unless its been in the account for a period of months anyway?

Sorry I clearly don't understand them well enough, the area around the new tax year is what confuses me!

-Also realistically, if I stroll into a bank with appropriate identification, how quickly could an ISA be set up? I attempted an online Santander one and its gone belly up as they want me to send 'verified' documents to them etc
 
basically you miss out on being able to shove up to £5340 into last year's (2011/2012) allowance. This is a problem only if you have a lump of money ready to go into savings and are also likely to fill the 2012/2013 allowance.

Don't worry about the timing of it too much, though don't leave it too long to set one up as the best deals are usually available around this time of year.

I have 10k sitting in an ISA on which the interest rate is about to plummet (think it was a 12 month bonus type deal) and need to transfer it ASAP.
 
You need a passport or drivers license, a cheque for the amount made out to yourself, a bank statement or utility bill with your current address and perhaps an hour or so of your time so you can wait till someone appropriate at the bank is free, though doing the forms etc only takes 15 minutes. If you've got all of those things tomorrow then walk into whatever bank/building society you're interested in getting an ISA with and you should be okay.

I sorted out the 4% 2 year one Santander is doing last Wednesday and the guy said it would be processed next day so if you do it tomorrow you should get in before the lock. If you don't then the allowance is gone. If you're really pushed for time, since some places stop accepting new ISAs a few days before the new financial year, then you could try whatever bank you're currently with. You might end up with a worse deal but some tax free interest is better than none (or whatever laughably terrible rate normal accounts get). That way it might be doable immediately, since they have all your information and money already.
 
Shicky said:
Looks like i'll probably miss opening one before the new tax year so my questions are:

- If I don't get it open on time, what do I miss out on? Just having one for this current tax year and being able to add the next tax year's allowance on too? Surely no interest would gather unless its been in the account for a period of months anyway?

Sorry I clearly don't understand them well enough, the area around the new tax year is what confuses me!

-Also realistically, if I stroll into a bank with appropriate identification, how quickly could an ISA be set up? I attempted an online Santander one and its gone belly up as they want me to send 'verified' documents to them etc
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Right I work in a bank so will explain this as straightforward as possible.

An ISA is an individual savings account and compared with other savings accounts have a number of benefits.

Advantage 1 - Tax free savings. What it says on the tin, any interest you make in an ISA is not taxed unlike bonds etc.

Advantage 2 - Interest rate. Compared with other instantly accessible savings accounts there are not many that can compete with an isa between 2 to 3%.

What will you lose out on if you dont use it this year? Nothing at all if ( as mentioned above ) you dont have £5340 to put into one straight off the bat. If however you do have the above amount then you are restricting your tax free savings for this tax year which begins next week because you can only pay into one isa per tax year. So you will only lose out if you have more then £10'000 worth of savings.

You are right in saying it will take a while for an isa to accrue interest and this occurs in different ways dependent upon the company. Where I work interest is paid in on the 1st working day of each month in small installments of the 3% interest.

The amount of money you can put into an isa is capped each year so tax year 2010-2011 was £5340 whereas 2011-2012 is £5640.

As for how long it would take. If you for arguments sake bank at Lloyds then it will take 5 mins as they can just take a written instruction from you in branch. If you wanted it with another bank of which you dont currently bank then it will take around 1 hour as it is treated as a new account.

My last piece of advice would be watch out for some ISA's which arent instant access as they can come back to bite you with none free withdrawal charges. Not only this but watch out for small print, some companies have high interest rates but use up not only this years isa allowance but also the next years aswell. I could be wrong but I believe Santander do this.

Hope this helps :)
 
4Play said:
Not only this but watch out for small print, some companies have high interest rates but use up not only this years isa allowance but also the next years aswell. I could be wrong but I believe Santander do this.
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Interesting you mention Santander I applied last night for the 3.3% ISA and there was something that didn't sound normal in the terms.

From my perspective however, the account is penalty free so I will make sure I get it closed before they can do anything about "renewing" next year.
 
For OP : Sounds like you can open the Santander ISA if you go to branch, so I meant that when I replied above but put online for some reason :(

From their website :

2011/12 Direct ISA
The online deadline for 2011/12 tax year online applications has now passed. If you would still like to apply for this year's cash ISA allowance you still have time by visiting your local Santander branch by 5th April (subject to availability of appointments).

You can find your most convenient branch using our branch finder. Remember, you'll need your National Insurance number, and bring some proof of your name and address. See a list of acceptable ID for taking into a branch.
 
i went into my local santander today after going into barclays and confirming 3.05% (1% of which was a bonus and fixed for 1 year aslong as i made no withdrawals) was the best they could offer plus they didn't offer transfers in. i wanted to transfer in over £8k in barclays that i had in 2 ISA's at barclays and they couldn't do this, what i would have had to do was transfer the money to my current account and then open up their 3.05% ISA but i believe i would have been capped at about £5.6k.

santander offered me instant access (i will get a card) and a rate of 3.3% i took in my passport and utility bill and signed a few forms.

after the 7th, they will demand the money from barclays and the current ISA's i have with barclays will be closed and one ISA with santander created.

seems quite simple so far but then, the money hasn't gone in yet but all seems well.
 
robskinner said:
Interesting you mention Santander I applied last night for the 3.3% ISA and there was something that didn't sound normal in the terms.

From my perspective however, the account is penalty free so I will make sure I get it closed before they can do anything about "renewing" next year.
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I dont know the ins and outs of santanders isa but I know from experience in my bank that people wanting to sign up to our isa this year are incapable from opening up one with those guys last year.

I think natwests is similar in that it is a higher rate but is fixed for 2 years, unlike Barclays for example which follows the base rate (which i personally hope doesnt go up) so could potentially climb a lot higher then some of its competitors.
 
Chris1712 said:
What's the general consensus on S&S ISA's where you can pick your own funds etc.?
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Bit of an open-ended question - really depends on what you buy. You can buy equities traded on a "main exchange", OEICs, gilts & corporate bonds. Personally I'm quite amazed that people scrabble around to dump 5k in cash into something paying 3.5% each year when you can easily and safely beat that with a S&S ISA.
 
jamief said:
Bit of an open-ended question - really depends on what you buy. You can buy equities traded on a "main exchange", OEICs, gilts & corporate bonds. Personally I'm quite amazed that people scrabble around to dump 5k in cash into something paying 3.5% each year when you can easily and safely beat that with a S&S ISA.
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Well yes that's what I'm thinking. I can't remember the exact ISA provider I was looking at now! I've got about 3.5k saved up at the moment and it's just sitting there doing nothing, feel like I should spend some time looking into S&S options, any good reads?
 
Chris1712 said:
Well yes that's what I'm thinking. I can't remember the exact ISA provider I was looking at now! I've got about 3.5k saved up at the moment and it's just sitting there doing nothing, feel like I should spend some time looking into S&S options, any good reads?
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Time is short, but www.trustnet.com have been doing many articles on solid picks for S&S ISAs for a while now.

Just remember there are no guarantees. That paltry 3.3% of a cash ISA could quite conceivable trounce some rubbish fund picks (and probably will in year one, taking into account all the charges).
 
Theophany said:
Time is short, but www.trustnet.com have been doing many articles on solid picks for S&S ISAs for a while now.

Just remember there are no guarantees. That paltry 3.3% of a cash ISA could quite conceivable trounce some rubbish fund picks (and probably will in year one, taking into account all the charges).
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Buy a gilt then, guaranteed income ;)

I would second trustnet. If you want guaranteed income, pick a gilt. If you want nearly guaranteed, go for a solid corporate bond. If you are happy to take more of a risk, a fund etc.
 
Can't say I'd do S&S based ISA atm or any investment involving the stock market (unless you have a good head for it and the motivation to micromanage it) - I've seen people lose so much over the last 18 months or so that even in the long term they probably won't come off any better than a simple cash ISA would have done and in some cases probably lost 1000s.
 
jamief said:
Buy a gilt then, guaranteed income ;)

I would second trustnet. If you want guaranteed income, pick a gilt. If you want nearly guaranteed, go for a solid corporate bond. If you are happy to take more of a risk, a fund etc.
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Gilts will tank this year and yields are at the lowest they've been for decades. Avoid them like the plague.

If you want a decent income, go for an income-seeking equity fund (i.e. tobacco, big pharma, weapons companies - all the 'sin' companies) - you can get a real yield of 5-7% which is more than a gilt will get you.
 
4Play said:
Not only this but watch out for small print, some companies have high interest rates but use up not only this years isa allowance but also the next years aswell. I could be wrong but I believe Santander do this.
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So you are saying some banks have ISA products whereby if we invested £5340 today we'd be using up 'next years allowance' :confused:

What?
 
[TW]Fox;21611091 said:
So you are saying some banks have ISA products whereby if we invested £5340 today we'd be using up 'next years allowance' :confused:

What?
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I think he means those lock-in products whereby you have 1 allowed deposit, then you cannot access the money or make further deposits for a fixed period. IIRC Halifax have one with a rate of around 4.5% for a five-year fixed term.

However, you can just open a new ISA in the following tax year and it doesn't affect your allowance.
 
[TW]Fox;21611091 said:
So you are saying some banks have ISA products whereby if we invested £5340 today we'd be using up 'next years allowance' :confused:

What?
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Like I said I dont work in a bank where this is the case so I have limited knowledge on it however I have had customers come into my branch annoyed because of this situation so yes. I will try to find the isa now :)
 
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