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Best Cash ISA Tax Free Savings Accounts for the New Tax Year and Cash ISA Rules

Personal_Finance / Savings Accounts Apr 04, 2007 - 07:59 PM GMT

By: Shahla_Walayat

Personal_Finance

The New Tax year is virtually upon us and nearly everyone over age 16 has a fresh £3000 allowance to add to their tax free Cash ISA accounts.

But first, if you have not already used your £3000 cash isa allowance for the 2006-07 tax year, then today (5th April) is your last day ! probably the easiest way would be to top up your existing Cash ISA which you should be able to do over the phone or at the branch.


A quick Summary of Cash ISA Rules

  • The CASH ISA accounts are TAX FREE, and do not have to be entered onto any tax returns.
  • The Allowance for 2007-08 is £3000, this is set to rise to £3,600 for 2007-08.
  • You can only open ONE New cash isa per tax year, and you can add new monies to One Cash Isa per tax year (see transfers).
  • You do not have to open a Cash ISA with your existing provider, i.e. you can open an account at different providers every year.
  • Most providers allow for transfers in. And ALL should allow you to transfer out.
  • Once you withdraw from a Cash ISA you cannot then then re-deposit into. The £3000 limit refers to total deposited, and not maximum account balance. So if you deposit £3000, and withdraw £1000, then you cannot re-deposit that £1000 in the same tax year as you have used up your £3000 deposit limit.
  • To maximize your tax free interest, it is best to open your account at the start of the tax year.

The following are a selection of the current top Cash ISA accounts

Financial Institution Interest Rate Fixed Period Minimum £ Comments
Alliance & Leicester 8.10% Fixed £1 Requires a Premier Current Account, and includes 2% bonus
Barclays 6.50% Instant £1 Includes 1% bonus for 12months
Scarborough 6.10% 30day £1,000
Northern Rock 6.01% 1 year £500
ING Direct 6% Instant £1 Includes 1.4% bonus, - rate shown is 12 month return
Derbyshire 6% 2 years £1,000
Halifax 6% 4 years £3,000
Nationwide 5.85% 1 years £1,000 Longer fixes at same rate available
Nat Savings 5.80% Instant £1,000 Tracks the base rate +0.55% until April 2008
Halifax 5.80% 3 years £3,000 Better to go for 4 year 6% fix
Kent Reliance 5.71% Instant £1 Tracks the BOE base rate

 

Out of all of the above accounts the one that I find the most appealing is the Barclays Instant access 6.5% rate which is fixed for 12months. Which after 12months drops to 5.5%, which is still a good rate, and you always have the option of transferring the account elsewhere at that time. The best longer term fixed rate cash ISA's are the Derbyshire at 6% for 2 years and the Halifax at 6% for 4 years.

Even if interest rates do rise to 5.5%, I doubt that the 6.5% and the 6% rates shown above would be bettered, and in the meantime you will have forgone receiving interest tax free on your savings, which would negate a marginal increase in interest rates.

By Shahla Walayat
http://www.moneyforums.co.uk

Copyright © http://www.moneyforums.co.uk 2007 - All Rights Reserved

The UK Money Saving & Investing Forums is a free online publication providing, FREE Online Tools including Credit Score Calculator and the Savings Calculator . Money Saving Guides such as Credit Card Stoozing , Savings Tree , Money Saving Guide . Personal Finance Discussion Forums open to ALL, supported by experienced moderators, to discuss any personal finance topics from 0% Credit card deals , to the state of the Housing market . The best Savings & Deposit Accounts etc.

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Comments

Shahla W
30 May 07, 01:34
UPDATE 29th May 2007

Some of the best Cash ISA's available post the rise in UK interest rates to 5.5% are -

Derbyshire 6.00% fixed for two years

NS&I at 6.05%

Northern Rock at 6.01% for a 1 year term

Egg at 6.05%

Norwich & Peterborough BS 2 Year Fixed Rate Mini Cash ISA - 5.90%

The deadline for the Barclays 6.5% ISA is today, so get a move on ! Go to the branch today if you want this one.


Shahla_Walayat
03 Jun 07, 09:18
Barclays Account Opening Delays

There is heavy demand for the barclays cash isa

Please take note of the following announcement by Barclays

Our Tax Beater Cash ISA was withdrawn from sale at close of business on Tuesday 15 May 2007. Instead, take a look at our other tax-free savings.

Still got your application?

If you have printed off your application form, or picked up a form in branch, and not yet returned this to us you still have time.

Existing Customers

Completed application forms can be posted to us to arrive no later than Wednesday 30 May 2007. Send your form to:

Barclays ISA

Freepost RRGK-YYAS-LTST

Barclays Service Centre

Glasgow

G58 1AA

Alternatively, you can hand in your application form at any Barclays branch no later than Tuesday 29 May 2007 and we will post it for you.

New Customers

If you are not currently a Barclays customer you will need to visit one of our branches with your identification and address verification documentation and your completed application form no later than close of business on Tuesday 29 May 2007. Details of suitable documentation are given within your application pack.

If your application is received between now and 30 May 2007, you should receive notification of your account details by the end of June.

So if they recieved your app by 29th or 30th May, then the account should eventually be opened and the interest back dated to the date of the application, even if they have not cashed your cheque.


D Watkins
05 Jul 07, 10:32
Cash ISA Query

A query. My wife and I have cash ISA's. If one of us dies then what steps do we have to take to transfer the Cash ISA to the surviving partner??


Sarah_Jones
05 Jul 07, 10:41
Cash ISA After Death

Cash ISA's cannot be transferred.

If one of you die then the cash ISA would have interest added gross upto the date of death and the account converted to an NON Cash ISA savings account, usually an instant access savings account, which would be treated inline with other assets of the estate of the deceased.


Dan Leitch
14 Jul 07, 15:06
CASH ISA after death

I believe it is possible if you are married to transfer between partners whilst you are alive though, so if one or other of you is likely to live longer then it may be worth doing that.


Nadeem_Walayat
14 Jul 07, 19:29
Cash ISA Transfer to Spouse

Hi Dan

A cash ISA cannot be transfered to another person, i.e. your spouse. You can withdraw the money from a cash isa account to transfer to your spouse who then opens a cash isa using their own annual allowance, but in the process you have lost the cash isa status on that part of the money withdrawn from your cash isa account and transfered to your spouse.

YOU can ONLY transfer a cash isa to another provider in your own name and preserve the tax free status of those funds.


Daphne Sankey
23 Jul 07, 09:36
DIRECT ISA after death of spouse

The ISA matures 06/2008. When does it become treatable as an instant access savings account?


Nadeem Walayat
23 Jul 07, 11:37
Direct ISA Maturity

The Direct ISA is already an instant access tax free savings account.

However, on death it immediatly loses its tax free status as of the date of death, and is treated as an taxable instant access savings account.


colin audley
18 Feb 09, 10:13
tax on maturity

having just retired and drawn a small private pension and was taxed on it which was,nt explained at the time of purchase does the same apply if my grandaughter cashes in her i.s.a at say when she,s 60


Richard
29 Jul 09, 04:09
ISA maturity

After a Cash ISA has run its one year as a tax free account, does it then fall back to be a normal deposit account? If so why does my bank not tell me this?!


Richard
29 Jul 09, 04:14
Stock ISA

I enveloped off part of my stock investments to be in an ISA. I think now that has gone beyond one year. Will that sum continue to be be tax exempt after the year is over or will I have to re-apply to / re-contact the investment company to have an amount put into an ISA each and every year?


Nadeem_Walayat
29 Jul 09, 07:14
Cash ISA Answers

1. Cash ISA accounts remain as cash isa accounts , i.e. if you open a 1 year fixed rate cash isa, then after 1 year it is converted to a variable rate cash isa, which you can then elect to move elsewhere, but it always remains as a cash isa account.

2. the ISA wrapper is permanent, unless you breach the terms i.e. deposit too much one in a tax year.

Remmeber the isa allowance is ANNUAL, so each year you can deposit / invest £10,200 in total


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