Flexible ISAs guide

2456

Comments

  • isasmurf
    isasmurf Posts: 1,999 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    webwiz wrote: »
    Suppose I have a previous years cash ISA with company A. I open a new ISA with company B and transfer in some cash from A, but do not subscribe any of this year's allowance. I then open a new ISA with company C to take this year's allowance. If B is flexible can I withdraw cash from B and replace it before the end of the year?

    Yes.

    HMRC guidance notes
    Except for when made to a Lifetime ISA, flexible ISA replacement subscriptions do not count as subscriptions for the purpose of determining whether the investor has subscribed to more than one ISA of the same type, or whether there has been a ‘gap year’ in relation to a continuous ISA application.

    For example, Miss Welch subscribes to her cash ISA with manager A in each of the tax years 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17 under a continuous application. On 6 April 2017, her ISA manager changes the terms and conditions of her ISA to offer flexibility. Miss Welch makes a withdrawal of £12,000 on 7 April 2017, and replaces £10,000 before the tax year end. Her net subscriptions with manager A for the year 2017-18 are £nil. Because replacement subscriptions do not count as subscriptions for the purpose of the ‘one of each type’ rule, Miss Welch could subscribe to a cash ISA with another manager in 2017-18. If she wants to make fresh subscriptions in 2018-19 with manager A she must make a fresh application as the replacement subscriptions in 2017-18 do not ‘frank’ a gap year in relation to a continuous application.
  • shuangg
    shuangg Posts: 6 Forumite
    Mr. Peel subscribes £20,000 to his flexible ISA on 6th April 2017

    He also transfers in £11000 (£10000 capital + £1000 interest) previous year's ISA into the same account.

    On October 1st interest of £200 is credited to the account.

    On 30th October Mr. Peel withdraws £31,100.

    How much can he put back in before the end of the current financial year?

    Is the answer £31000?
  • AirlieBird
    AirlieBird Posts: 1,046 Forumite
    shuangg wrote: »
    Mr. Peel subscribes £20,000 to his flexible ISA on 6th April 2017

    He also transfers in £11000 (£10000 capital + £1000 interest) previous year's ISA into the same account.

    On October 1st interest of £200 is credited to the account.

    On 30th October Mr. Peel withdraws £31,100.

    How much can he put back in before the end of the current financial year?

    Is the answer £31000?

    If he withdraws £31,100 from a flexible ISA he can put back in £31,100 to the same ISA in the same tax year.
    Did you really mean to put loose?
    Lose: no longer possess, not to retain, unable to find
    Loose: not firmly or tightly fixed in place
  • mickeymarcus
    mickeymarcus Posts: 1 Newbie
    I'm trying to find an official reference to
    If you withdraw current year's cash from one type, you are allowed to replace it in another type, eg, withdraw from a cash ISA, replace in an innovative finance ISA.


    Most seem to suggest if you withdraw from e.g. a Barclay's cash ISA you must repay back into Barclay's cash ISA.
  • masonic
    masonic Posts: 23,236 Forumite
    Photogenic Name Dropper First Post First Anniversary
    mickeymarcus wrote: »
    I'm trying to find an official reference to


    Most seem to suggest if you withdraw from e.g. a Barclay's cash ISA you must repay back into Barclay's cash ISA.
    https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#f-isa

    Search page for text starting "Withdrawals of current year subscriptions, can effectively be replaced in any current year ISA"
  • Geronimo83
    Geronimo83 Posts: 5 Forumite
    Hello
    Advice would be much appreciated. I have Previous ISA with provider A to the amount of 30 k rolling on from last 2 years. I have not added to the current isa ie 18/19. I am thinking of switching to a flexible isa and then transfer this to a saving account and put the money back into a flexible isa before April 4. Is that a sensible thing to do? Should I choose a flexible ISA which pays annually so I can maximise interest on the 30k?
    Or is that not possible. Any advice or guidance would be appreciated.
  • masonic
    masonic Posts: 23,236 Forumite
    Photogenic Name Dropper First Post First Anniversary
    Geronimo83 wrote: »
    Hello
    Advice would be much appreciated. I have Previous ISA with provider A to the amount of 30 k rolling on from last 2 years. I have not added to the current isa ie 18/19. I am thinking of switching to a flexible isa and then transfer this to a saving account and put the money back into a flexible isa before April 4. Is that a sensible thing to do? Should I choose a flexible ISA which pays annually so I can maximise interest on the 30k?
    Or is that not possible. Any advice or guidance would be appreciated.
    Yes this is a sensible strategy. It doesn't really matter when interest is paid in the ISA, you'll earn interest for the few days the money is in the account either way.

    It might even be worth pulling the money out more permanently and going for a 1-2 year fixed rate savings account given that £30k can be returned to an ISA within 2 tax years in the unlikely event you wished to do so.
  • Geronimo83
    Geronimo83 Posts: 5 Forumite
    Hi Masonic, first of all thanks for such a prompt reply! Its brilliant, Thats useful advice. Im just keeping the money readily available to put a deposit on a house in the next 6-8 months so might have to tap in to the 30 k savings. So if i switch to a flexible ISA and transfer the 30 k, and then retransfer to a saving account like MARCUS and then close that account and put it back in flexible ISA before April deadline..
    A - ill get interest on the saving account
    B - if there a flexible ISA that pays annually and calculates interest at the end which would fit in the time i put the money back? ( i know its a little cheeky but you dont know if you dont ask right?) or is interest calculated daily in a flexible ISA?
    Sorry for the jargon.
    Thank you in advance.
  • eskbanker
    eskbanker Posts: 30,920 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Geronimo83 wrote: »
    B - if there a flexible ISA that pays annually and calculates interest at the end which would fit in the time i put the money back? ( i know its a little cheeky but you dont know if you dont ask right?) or is interest calculated daily in a flexible ISA?
    From an interest perspective, flexible ISAs are the same as any other savings account, in that you'll only earn interest on a daily basis, regardless of when it's paid.

    In other words, if you fund an account the day before the annual interest payment date, you'll receive 1/365th of the annual rate....
  • Geronimo83
    Geronimo83 Posts: 5 Forumite
    edited 13 February 2019 at 6:45PM
    Thank you for your assistance in this regard,
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.1K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.6K Spending & Discounts
  • 235.2K Work, Benefits & Business
  • 607.8K Mortgages, Homes & Bills
  • 173K Life & Family
  • 247.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards