Changing ISA Rules for the Over 50s - FAQs
- Why are ISA limits for the over 50's changing in October?
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In the Budget (published on 22nd April 2009), the Government announced that it would be raising the ISA allowance. All savers will be able to invest £10,200 tax free (£5,100 in a cash ISA and £5,100 in a stocks and shares ISA or £10,200 in total in a stocks and shares ISA) from 6th April 2010. However, the government also announced that it would be permitting savers aged 50 and over to begin taking advantage of this new limit from 6th October 2009.
The current allowance is £7,200 overall, which breaks down as £3,600 in a cash ISA and £3,600 in a stocks and shares ISA or £7,200 in total in a stocks and shares ISA.
- Who is eligible for the new 6th October 2009 limit?
- Anyone aged 50 or over, or due to turn 50 before 5th April 2010 will be eligible for the new maximum cash ISA investment amount of £5,100. In other words, 49 year olds who turn 50 before the end of the tax year do not have to wait until their 50th birthday to top up their ISAs
- Do ISA providers have to offer the top-up to over 50s from 6th October 2009?
- No. The FSA, Treasury and HMRC have recently issued guidance stating that offering top-ups to the over 50s is not compulsory. This may mean that some ISA providers do not offer the top-up.
- What are Saffron doing?
- Saffron feel very strongly that offering the top-up to our older savers is the right thing to do and will be encouraging all eligible savers to top up to the new limit after 6th October 2009.
- How are Saffron going to tell customers about this change?
- We are emailing as many customers as possible to inform them of the changes. FAQs will be published on our website. We will also be running an awareness campaign in our branches and encouraging anyone with questions to ask our staff.
- How are eligible customers allowed to top up their cash ISAs?
- All eligible customers will be allowed to add to their accounts to bring their annual allowance up to £5,100 from 6th October 2009. They can do this by sending us a cheque, by bringing the cash to our branches or by electronic transfer*. They can also transfer in to their ISAs from another Saffron savings account (where transfers are permitted).
- What about our One Year and Two Year fixed ISAs?
- Even though these are opened with a one-off payment, we will be accepting further top-ups from all eligible customers from 6th October 2009.
- How will eligible customers be able to top up their Regular Saver ISA?
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The Regular Saver ISA is slightly different as it operates on the basis of a maximum deposit each month. Under the old ISA rules, this is £300 per month as £300 x 12 = £3,600.
From 6th October 2009, we are increasing the monthly deposit amount maximum for eligible customers to £550 per month.
- Example 1
- Bob took his Regular Saver ISA with us in March 2009 making his first £300 payment in this month (this counts for the 08/09 tax year). He achieves a total of £1,800 in his ISA with the September payment for the 09/10 tax year. In October he can increase his maximum payment to £550. He pays this every month, finishing his 12 month agreement with the February 2010 payment. He has achieved a total in this ISA product of £4,550 for the 09/10 tax year. At this point his ISA becomes an easy access ISA and he may place additional funds here to reach £5,100 for the 09/10 tax year.
- Example 2
- Sandra took her Regular Saver ISA with us in April 2009 making her first £300 payment in this month (this counts for the 09/10 tax year). She achieves a total of £1,800 in her ISA with the September payment for the 09/10 tax year. In October she can increase her maximum payment to £550. She pays this every month, finishing her 12 month agreement with the March 2010 payment. She has achieved a total in this ISA product of £5,100 for the 09/10 tax year.
- Example 3
- Phillip took his Regular Saver ISA with us in May 2009 making his first £300 payment in this month (this counts for the 09/10 tax year). He achieves a total of £1,500 in his ISA with the September payment for the 09/10 tax year. In October he can increase his maximum payment to £550. He pays this every month through to March 2010 achieving £4,800 in total for the 09/10 tax year. He is allowed in March 2010 to pay an additional £300 into his Regular Saver ISA to achieve his full 09/10 allowance. In April 2010 he can pay £550 into his Regular Saver ISA thereby completing his 12 month arrangement. His Regular Saver ISA becomes an easy access ISA at that point or he can transfer this to another ISA if he should wish.
* Please note, to make payments electronically (by BACS/CHAPS) please use the sort code and account number below, quoting your 8 digit ISA account number as the reference.
Sort Code: 20-74-05
Account number: 00775991
Reference: your 8 digit ISA account number
