Can I get a loan against my ISA?

bbxsa

I have a decent sized stocks and shares ISA. I have a need for the money short-term but do not wish to withdraw it as I will not be able to replace it back into the tax-advantaged wrapper. Is it possible to get a loan against the value of the ISA? Does anyone know of lenders which do this at good rates (and it should be a good rate as the loan would be fully secured against the liquid ISA holdings)?

Thanks.

Baldur

Specifically prohibited by the ISA regulations as per HMRC ISA guidance, Chapter 10.48:

Using an ISA as security for a loan

10.48 It is a requirement of the ISA regulations that
• the ISA investments remain in the beneficial ownership of the investor
• the investor can transfer his or her ISA or make withdrawals, without restriction,
and
• the manager, in the case of a discretionary ISA, can make purchases and sales
without restriction.
There are various types of charge a lender may require in connection with a loan.

bbxsa

Thanks for your reply. However, later in the regulations it reads:

10.55 HMRC have no objection if a borrower agrees with a lender (not the manager) that he or she will not withdraw his or her investments whilst the loan remains outstanding. A manager may also accept a power of attorney in favour of the lender to exercise its security if the borrower is in default.

Is a loan against an ISA strictly prohibited? Or does is simply say the investor must remain the beneficial owner of the ISA?

Would a loan (esp by the ISA manager who has oversight of the ISA) which was called in if the value of the ISA were to fall below the value of the loan be compatible with the regulations?

bbxsa

In fact, I am now confused as to which type of loan the regulations are attempting to forbid. It could be:
(1) The ISA manager is not allowed to use the investor's shares as security for their stock/securities lending program.
(2) The investor is not allowed to pledge his ISA as security for a loan.

I am thinking the rules pertain to issue (1) and not to issue (2). Any thoughts?

Baldur

bbxsa wrote: »

Thanks for your reply. However, later in the regulations it reads:


Is a loan against an ISA strictly prohibited? Or does is simply say the investor must remain the beneficial owner of the ISA?

Would a loan (esp by the ISA manager who has oversight of the ISA) which was called in if the value of the ISA were to fall below the value of the loan be compatible with the regulations?

As I read the guidance, paragraphs 10.49 et seq relate to mortgage charges not loans. It appears that this interpretation is also held by ISA providers:

For example see http://www.bathbuildingsociety.co.uk/taxfreeaccount.html

Beneficial ownership may not be assigned or transferred to another person or used as security for a loan.

http://www.barclayslifeinsurance.com/Savings/ISAs/CashISAGoldenISAIssue3/P1242580433210

2.2 The ISA investments will be, and must remain in, the beneficial ownership of the investor and must not be used as security for a loan.