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Does anyone know anything about ISA rules?

(28 Posts)
Linnet Sat 15-Aug-09 15:38:46

I had money in an IASA account that I needed to take out. I've just discovered that the lady in the bank has taken the money out of my ISA, not the overflow IASA account that she was supposed to.

I'm not going to be able to put that money back into the ISA am I? I have the money sitting in the other account that I want to transfer into my ISA but I don't think they're going to let me do it.
Am I right in thinking that you can't take money out of an ISA then replace it within the same tax year?

Linnet Sat 15-Aug-09 16:02:05


Hopefully Sat 15-Aug-09 19:53:25

I had a bank cock up like this, and I phoned up and refused to get off the phone until they sorted it, basically. They can actually undo delete the transfer, which means it never happened and your ISA will be reinstated. Don't let them tell you they can't!

I said that if they couldn't manage to return money to ISA I wanted an equivalent rate of interest paid for the rest of the year into my other savings account. I got v snotty blush

Linnet Sat 15-Aug-09 22:53:18

I think I'm going to have to go in on Monday and see what they say. I have the three accounts and the girl printed out a list of the accounts and asked me which ones I wanted to take money out of, I was taking money out of two accounts you see, just to be confusing.

I wonder if I threatened to close down my ISA altogether if that would workin my favour? I'll just have to wait and see what they say on Monday.

Metatron Sat 15-Aug-09 23:25:57

just be nice and clear that there has been an error. There are always system ways round an error.

KingCanuteIAmAndTheDMCanFOff Sat 15-Aug-09 23:32:49

Do not threaten to close your ISA - they know that is just cutting off your nose and you won't o it, tell them you will transfer it away to another company.

As hopefully says they made a mistake so there should be a way round it as long as they are not being idiots about it! Be clear it was their mistake and that you would never have taken money out of the ISA.

Linnet Sat 15-Aug-09 23:47:31

I didn't mean close it completely, I meant close it at that bank and open one elsewhere. The thing is I don't even know if I can do that within this tax year.

KingCanuteIAmAndTheDMCanFOff Sat 15-Aug-09 23:53:45

You can't close it at that bank and open it elsewhere, it is not a normal account. You have to go to the new place and ask them to transfer the exisiting ISA without closing anything first.

As it stands you do not have an existing ISA for this tax year so you have to sort that with your current bank before you can transfer this years ISA.

Linnet Sun 16-Aug-09 00:00:07

KingCanute you seem knowledgable, I thought I'd read somewhere that if money is removed from an ISA you can't then put the same amount back into it within the same tax year. Do you know if that is correct?

I also knew about opening a new ISA somewhere else then transferring as I read that somewhere. I think that was where I read about not being able to remove money then replace it.

1dilemma Sun 16-Aug-09 00:00:43

what's an IASA?

Linnet Sun 16-Aug-09 00:06:30

The IASA is like an overflow account, that is what they told me at the bank when I opened the ISA a million years ago. If I pay in my full allowance, which I never do, when the interest is added it would push iover the limit so the excess is moved to this overflow account.

That was what the guy said to me anyway. I had some money from when we bought our house that was to be put aside for home improvements, the balance was to big to go into the ISA so we put it into the IASA. Now that we've had something done I needed the money from this account to pay the bill but they took it from the ISA.

KingCanuteIAmAndTheDMCanFOff Sun 16-Aug-09 00:10:39

You have an ISA allowence each tax year, once it has been used it is gone even if you pull the money out the next day, the allowence has been used for that year.

The next year you have the same ISA allowence (well excepting budget changes) and you can pay in again.

You can never replace money that has been withdrawn from an ISA, once the allowance has been used it stays used. You also cannot carry over allowences so if you only use half this year then you cannot use the rest of the remaining half next year to make up for it in some way.

Opening a new one then transfering, well it is semantics really, they open a new account for you ready for the ISA money to go into once the transfer has been actioned then send all the forms off to your current bank to set the transfer going, the important thing is that you cannot close your exisiting ISA down and then open it up elsewhere, if you do that you will lose your entitlement to use the ISA for previous years (and this year is you have already used you allowence) it has to be done the right way around.

TBH I would advise you to get your ISAs checked by a Financial Adviser, they will be able to explain how it all works properly to you and make sure mistakes don't happen!

KingCanuteIAmAndTheDMCanFOff Sun 16-Aug-09 00:12:48

Linnet, they should not be putting your interest payments into another account, the interest accrued stays in the ISA account with the rest of it...

Perhaps a Financial Adviser would be a good idea!

Linnet Sun 16-Aug-09 00:20:33

In my ISA I have some money that I used to open it. I also have a added over the years a few others bits and pieces. Mostly what I do is pay in a bit every month which is for my car tax/insurance the following year, it's due in June so I get the interest on the money(at the end of March)that I've added before I need to take it out to pay the tax/insurance.

I don't have a lot of money to save every month, I only put the tax/insurance money in to keep it open because one year I tried to add money and because I hadn't been adding regularly I needed to fill in a whole lot of forms and missed the interest deadline that year.

Linnet Sun 16-Aug-09 00:24:26

No the interest does stay in the ISA, the guy told me that if, once the interest was added, it made the balance over and above the yearly limit the excess would go into the other acount. It's not really that important anyway it works for me the way it is, sadly I'm not so rich that I can afford to save my full allowance every tax year so it's never been an issue.

1dilemma Sun 16-Aug-09 00:37:17

how odd the interest on mine stays in the account (or at lest I hope it does if not where is it shock) otherwise you wouldn't get tax ree interest on your interest IYSWIM?

sorry Linnet I'm not questioning you on your financial affairs I was going to start my own thread today I have 2 small ISAs both with 'good' building societies and have discovered today that this year both of them have dropped the interest rate well below 0.5% and have brought out a new ISA with a new name with a proper interest rate very shoddy behaviour IMHO

not what you expect from a building soc IMHO

KingCanuteIAmAndTheDMCanFOff Sun 16-Aug-09 00:39:43

1dillemma, complain to the FSA about it - now whilst the FSA still exist. Banks have been getting into lots of trouble for doing that kind of thing.

Metatron Sun 16-Aug-09 00:40:38

You are correct in that you cannot replace funds withdrawn from an isa. The funds that are put in are added up to create a total contribution i.e.

annual isa limit £4000

Paid in £2000 - total in £2000
Paid in £1000 - total in £3000
withdrew £1000 - total in £3000 - balance £2000
paid in £1000 - total in £4000 - balance £3000

however if there has been an error on their part they can reinstate the correct transactions.

Linnet Sun 16-Aug-09 00:40:45

Nothing has ever been transfered out of the ISA account in the IASA. The IASA was empty until the house money went into it.

Linnet Sun 16-Aug-09 00:44:32

That's what I thought Metatron. Which makes me think they probably won't let me transfer the money that should have been given out of the IASA into the ISA to replace it.

I'm also not sure if I'd be able to transfer the remaining money in the ISA, there is a little left, to another bank and then add the other money to it as it's within the same tax year.

1dilemma Sun 16-Aug-09 00:47:27

how odd, dare I ask is the IASA tax free or could it just be another account?

to answer the OP Linnet if the bank made a mistake they can correct it IYSWIM I'm always reading about them crediting people's ISAs and adding interest in the Saturday newspapers, I wouldn't ask for a years interest I'd ask for the equivalent at the tax free rate for ever grin

Canute do you think the FSA can be bothered? I am just so busy and stressed and everything it shouldn't be up to me to complain one of the socs is Nationwide I mean really they should know better shouldn't they?

KingCanuteIAmAndTheDMCanFOff Sun 16-Aug-09 00:53:31

No Linnet, when you transfer the details go with it so they will know how much you have paid in and withdrawn over the year already.

You need to get the bank to rectify their mistake before you do anything else.

FWIW the whole overflow interest avcount thing is wrong too, I have no idea why they told you that. As long as it has never affected you then no matter - but it would make me seriously question their advice!

1dilemma, yes they are interested. Yes Nationwide should know better but if people do not complain how are they going to be kept on the straight and narrow, like any other business they will get away with things if they can! You may be busy but this is your money! Why not just write to the bank and tell them you want the better interest rate or you will approach the FSA about it and see what happens? THey may just crumble without a fight!

1dilemma Sun 16-Aug-09 01:01:57

Oh yes Canute I am going in there on Monday to tell them to switch it now but I'm cross because I feel they have betrayed some of my trust, I feel that you take a (slightly) lower rate for going with a 'good' guy and that they shouldn't do this otherwise why not go with eg an Icelandic bank and make the UK taxpayer pick up the pieces.
I'm cross because I have lost some interest (it's probably about 40p!!) and I really really don't have time.

I have sooooooooo much to do and I have work and when I'm not there I don't want to drag my poor little kids into a very public bank in their Summer holiday (and I'm pregnant and everything hurts!!)really I could cry I have so much to do really I should get off here and do it but we are trying to de-junk since we want to move and I have spent most of the day tidying and now I need a break and some social interaction

sorry (and to Linnet too)

KingCanuteIAmAndTheDMCanFOff Sun 16-Aug-09 01:07:38

Can't you write to them? Nothing is spoiling if it takes a bit longer because you can ask for it to be actioned from the day of the letter IYSWIM. Once you have the letter in there (recorded) you can relax a bit as long as you keep up some pressure and respond to any letters from them swiftly.

1dilemma Sun 16-Aug-09 01:10:13

I'm just pathetic!

Actually they are really close (am in a city) so I will prob just drop by it riled me that I discovered on the same day that they both had done it (and sneakily I'm sure N'wide announced it in one of those interest rate update tables that came with voting papers rather than directly via a letter)

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