When can I invest £10,200 into an ISA?

Date posted: Wednesday, May 13, 2009

It was announced in the Budget that the over 50´s could, from 6 October 2009 invest up to an additional £3,000 in an ISA to enable them to contribute £10,200 in tax year 2009/10. For 2010/11 the annual subscription limit for all qualifying investors will rise to £10,200.

There has been some confusion as to how the “over 50´s” rule is to be applied in practice for tax year 2009/10. The crux of the matter is whether an investor has to have attained age 50 when the contribution is paid or has merely to attain age 50 at any time in tax year 2009/10.

The ISA changes are subject to consultation which is ongoing and scheduled to end on 20 May. The outcome should be made available within a couple of weeks via the regular HMRC ISA bulletin.

In our view Budget Note 51, which details the ISA changes, is ambiguous in its reference to “people aged 50 and over in 2009/10″. The draft regulations do not make it clear that the qualifying investor has to be aged 50 or over when the additional or £10,200 investment is made.

In an attempt to clarify the position we have spoken to the spokesperson for HMRC on this subject. He said that at present the “party line” is that the investor has to have attained aged 50 before he or she can make the additional investment. This means, for example, that an investor who attains age 50 on 5 November 2009 will not be able to invest an additional amount until 5 November 2009.

However, it is the intention of the government, according to the spokesperson, to be “fairly flexible” on this.

At present, therefore, the position would seem to be that an investor will need to have attained age 50 before investing the additional £3,000, or investing the full £10,200. Of course, this only affects those whose fiftieth birthday falls between 7 October 2009 and 5 April 2010 and the position for these individuals should be clarified well before 6 October 2009.