U.K. ISA.

[allgram]

My wife and I have two on-line ISA,s with "Newcastle Building Society" we applied to change our address as we now live in Spain,we have now received a letter saying that the change of address was done but we must close our ISA,s,as we pay tax in the U.K.I was led to believe that these ISA,s would be no problem.
Can anyone help.
Thank you
allgram.

[Enrique]

Hi allgram,
Might be the ISA rules.............

"You must be resident and ordinarily resident in the UK"

[El Cid]

If you live in Spain then they are liable for Spanish income tax and you should declare them in Spain together with the rest of your income (excluding UK government pensions.)

[annfoto]

ISA's are not tax free in Spain and are not a suitable investment if you live in Spain. It would be much simpler to transfer the money into a fixed rate savings bond as you will receive the interest gross and pay the tax on it in Spain.

we applied to change our address as we now live in Spain,we have now received a letter saying that the change of address was done but we must close our ISA,s,as we pay tax in the U.K.

I am confused by this bit. If you live in Spain you should pay tax in Spain, including interest earned in the UK

[scampicat]

We were allowed to keep our UK ISAs while we lived in Spain, and were allowed to accrue interest on them, but were not allowed to add to them. However, I think sometimes the particular banks want you to close them, I think that is up tot he particular bank.

[Martin Page]

You can not open or maintain an ISA if you are resident outside the UK ... when you notified your bank of your Spanish address that made you resident in Spain by default.

However you do not HAVE to close the ISA account. It just goes into roll over. year on year. But it may be better if you do ... !

[Campo Steve]

If you already had the ISA when you moved to Spain then you are permitted to keep it, but you can't add to it. Nationwide wrote to me to trll me this when we changed our address with thrm to our Spanish address. Any interest accrued must be declared in Spain, as others have said.

[gus-lopez]

If you already had the ISA when you moved to Spain then you are permitted to keep it, but you can't add to it. Nationwide wrote to me to trll me this when we changed our address with thrm to our Spanish address. Any interest accrued must be declared in Spain, as others have said.

+1

[rafiki]

If you already had the ISA when you moved to Spain then you are permitted to keep it, but you can't add to it. Nationwide wrote to me to trll me this when we changed our address with thrm to our Spanish address. Any interest accrued must be declared in Spain, as others have said.

Must the account stay with the same ISA provider or can it be moved to another to take advantage of a better rate?

[Campo Steve]

My understanding is that if you move it to another provider then you are closing one and opening a new one. You can't open a new one if living outwith UK.

[Sandramay]

Not so Steve. Provided the ISA is transferred internally between providers and not closed and re-opened by the customer the money does not count as a new ISA, so the new year's allowance is still available if you are eligible.

[annfoto]

so the new year's allowance is still available if you are eligible.

From direct.gov.uk website: http://www.direct.gov.uk/en/moneytaxand ... dg_4016062

To pay into an ISA you must be:
•a UK resident or a Crown employee, such as a diplomat or member of the armed forces, who is working overseas but paid by the government or the husband, wife or civil partner of a Crown employee

You may be able tor transfer it if someone else will take it on, which I suspect is unlikely, but what is the point? It is not tax free if you are tax resident in Spain

[rafiki]

You may be able tor transfer it if someone else will take it on, which I suspect is unlikely, but what is the point? It is not tax free if you are tax resident in Spain

If there is any chance that one might return to UK at some time in the future to live it could be worth it.

[Devils Advocate]

As someone who has taken advantage of a small concesion the powers that be allow us I used my allocation every year out of the business. Starting with the 6k PEPs then following on with the 7k (and a bit) ISAS...one for me and one for OH every year.

Now this thread has raised a couple of points that has made me wonder.

1) Ann says they are a waste of space if they are to be taxed..........could be true, however ISAS vary like chalk and cheese depending on the provider. Some of the 7k ones will make 1500 quid a year even in the recession, yet some will shed monies..........so if you've got an ISA(S) that you know makes decent returns surely it's beneficial to pay tax on the profits than having the money sat in a Bank earning zilch....and possibly at risk if it's a Spanish bank.

2) Brian said he would like to see about swapping poor ISAS for good ones or words to that effect.

How do you know an ISA is good until you get a statement?, how long do you wait before deciding it's bad?.........maybe you can swot it online but I couldn't be bothered with that. In essence is an ISA not just a punt and a bit of good fortune is needed too?............it's just a pity you can't own soley good ones , the difference between the best and worse with ours is gigantic, a fact I find hard to fathom, and I'm too much of a giant sloth to do anything about it.. Still better than Premium bonds though.

[gus]

The ISAs that tend to get swapped around are the cash ISAs. Banks have a tendency to offer a reasonable return (including a fixed term bonus) which drops to ground zero once the bonus expires...........makes it worth swapping around.
Some rates on offer are only for new money and do not allow transfers in............you need to keep an eye on them.

[Campo Steve]

DA. Better than premium Bonds? Maybe I am just lucky but I get more from Premium Bonds than I have got from ISA's. No big wins and maybe my ISA's aren't the best, but never a month goes by without getting something. My mother was the same. She loved her premium bonds and eagerly awaited the postman every month. Never disappointed.

Mind you, this month has been a bad one. Only £50.

[Devils Advocate]

Thanks Gus. So are the ones I buy at 7k a pop are not cash ISAs then?..........I'm not up to speed with these things.

Also no ISA I've ever had has had a "rate" attatched to it.......you just read the blurb and take your chances, some good ones,some stand still and some a waste of space.

Just saw your post in time Steve, yep Premium bonds did pay a return a couple of years back when a couple or more 50's a month were bagged. When they dropped to 25 quid the wins became rarer too, so having a decent amount tied up in them seemed daft.

[annfoto]

Some of the 7k ones will make 1500 quid a year even in the recession, yet some will shed monies..........so if you've got an ISA(S) that you know makes decent returns surely it's beneficial to pay tax on the profits than having the money sat in a Bank earning zilch....and possibly at risk if it's a Spanish bank

To earn that kind of money it would be invested in shares. There is nothing stopping you opening an online share dealing account with say RBS or Nat West. There is no need to transfer it to Spain or having it sitting an a UK account earning zilch, you can also put it in a fixed term bond and get the interest paid gross.

[Devils Advocate]

I've been told that about the Isas being linked to shares Ann.............as I say we've 3 of this paticular type and they are simply blistering..........no chance of any more though I was told

I'd love to invest in shares, I really would but I've not a clue where to start. It is something I'd so much like to get in to though.

[gus]

The current ISA limit is some £11,280 whereas the current limit for a cash ISA is £5640. You can invest up to £5640 in a cash Isa and the balance , up to a total of £11280 into a "shares" ISA.
The cash ISA is ideal for those who want the security of not risking a drop in capital.
As I mentioned, you have to be watchful regarding the interest rate offered on these - it's often lower than the best rate savings accounts but is, of course tax free.