Halifax explains key restriction for ISA savers looking to switch | Personal Finance | Finance
Halifax has issued a warning about an important restriction on ISAs in response to a query from a customer.
A saver contacted the bank over X to ask: “I have a junior ISA for my child with another bank. They’re reducing the interest on it. Can I transfer it to your Kids’ Monthly Saver account?”
At the time of writing, the Kids’ Monthly Saver pays 5.5 percent fixed for 12 months, while the top-paying Junior ISA as listed on moneyfactscompare.co.uk is at 5.2 percent.
Savers will be looking to switch now as interest rates have been falling in recent weeks, with the base interest rate dropped from 5.25 percent to 5 percent in the Bank of England’s latest decision.
Halifax responded to the customer to state: “You can’t transfer a Junior ISA into any other type of account other than another Junior ISA.”
The bank also set out another important restriction for the saver to note, saying: “You can still open a Kids’ Monthly Saver, but you can only credit this monthly between £10 and £100 per month.”
To open a Kids’ Monthly Saver, you have to be aged 18 and over and be a UK resident, and the child must be aged 15 or under.
If you are not the parent or legal guardian of the child, you will need their permission to open the account.
A person can save up to £20,000 into ISAs. Savers have been urged to think about their ISA savings ahead of any changes in the Autumn Budget next week.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said this is important as many people will be paying more tax due to income tax thresholds staying as they are, so people will pay more as their income increases.
She explained: “The best way to protect savings interest from income tax is to hold up to £20,000 a year in a cash ISA.
“If you have the money available now, it may make sense to open an ISA sooner rather than later, so you know where you stand.”
The expert also highlighted another way for couples to keep their tax bill down. She said: “If you’re married or in a civil partnership and your partner pays a lower rate of tax, you can transfer income-producing assets into their name.
“It means you can both take advantage of your tax allowances. You can also use all the tax-efficient vehicles at your disposal, including your ISAs and pensions, as well as the Junior ISAs and Junior SIPPs of any qualifying children.”
ISAs are tax-free with no tax to pay on any interest or on any growth in investments wrapped in an ISA product.
