Newcastle has ISAs all wrapped up

Newcastle Building Society is helping savers to get even more out of their tax free cash ISA allowance by enabling customers to consolidate their money across a number of cash ISAs this tax year.

UK savers are permitted to pay into a cash ISA, with one financial services provider in a tax year. New improvements to Newcastle’s systems, in accordance with HM Revenue and Customs rules, mean that customers are not tied to just one account and can choose to split their cash ISA savings with the Newcastle to benefit from a range of options such as guaranteed rate, easy access and longer term growth.

Newcastle’s new ISA feature is available to all eligible savers including those who have not yet opened a cash ISA for the 09/10 tax year and to existing Newcastle ISA customers who have not yet used this year’s full cash allowance.

The new feature is launched in time for savers to benefit from the increase in the cash ISA allowance for over 50s to £5,100 from October 2009.

Example:

For the 09/10 tax year, Customer A has invested their £3,600 cash allowance in a fixed rate cash ISA. This product is now closed to new funds.

Customer A is over 50 and therefore eligible to invest a further £1,500 in cash when the ISA rules change from October 2009.

As their existing cash ISA is closed to new funds, Customer A should check with their financial services provider whether they will allow another cash ISA to be opened – many will not.

If Customer A holds their ISA with Newcastle Building Society, they will be able to open any ISA account from the available range to invest their £1,500 remaining tax free cash allowance.

Newcastle’s system improvements mean that customers may invest their cash allowance across different types of products. For example, Customer A could have £3,600 of their cash ISA allowance in a fixed rate account, and may choose an access account for the remaining £1,500.

All of Newcastle’s ISA products allow transfers in from previous years’ ISA subscriptions.

Steve Urwin, Senior Marketing Executive at Newcastle Building Society, said: “Because our system tracks the customer, rather than the account, it means that savings can be split across a number of products, as long as the total balance is within the maximum allowed for an individual cash ISA. Not all cash ISA providers have their systems set up in a similar way.

“As the example shows, the ability to consolidate the current year’s cash ISAs may be of particular benefit when the cash ISA limit for over 50s is increased to £5,100, and will be an option for 76% of Newcastle’s cash ISA customers who will be aged 50 or over on 01 October. These customers will be able to open an additional cash ISA with terms that suit their individual needs. Many customers are with a provider that does not offer this feature could effectively lose this extra allowance.

“There are also many investors out there who do not benefit from using their whole allowance, for example when limited issue products close within the tax year and their provider restricts them to one account. Furthermore, due to this restriction, many providers do not make limited availability products available to customers who do not have the full allowance to invest.

“We have seen a 43% growth in cash ISA balances year on year, and now that our customers can consolidate their cash investments, choosing from our competitive product range, we see this trend continuing.”

For more information, visit newcastle.co.uk