Taking Money Out of ISA

Curious_Yellow_2

Hello all,

Quick question here.

I have an ISA from last year of about £5000 which I have continued saving into. Can I withdraw a sum of money from it without affecting this year's allowance?

Grateful for any advice!

thenudeone

Yes, This year's allowance is unaffected by what you do with previous year's balances.

You can still make deposits totalling £5640 this year

innovate

Curious_Yellow wrote: »

....... which I have continued saving into............

If you mean by that that you have paid in money since April 6 2012, any withdrawals are likely to count against you current tax year's allowance - at least up to the amount you paid in this tax year.

If you wanted to protect your 2012-2013 allowance completely, and only withdraw from your last year's ISA, you'd have to split the old and the new money by transferring either of them, and then withdraw from the one that has your last year's money transferred into.

However, does it matter much which of your money loses its ISA protection?

Mikeyorks

innovate wrote: »

If you mean by that that you have paid in money since April 6 2012, any withdrawals are likely to count against you current tax year's allowance

I simply don't follow that? You can pay in £5640 this year - it's immaterial what you take out.

And where the ISA holds both old and new money - it's considered you're taking out the current year funds first. Although it's not a straightforward calculation if transferring:-

HMRC_guidance wrote:

Mr Rose subscribed £3,000 to his cash ISA in year 1. He subscribes a further £1,000 in year 2. He withdraws £500, leaving £3,500 in the ISA. His upper limit is therefore £1,000, and the lower limit is £500.
Mr Rose can therefore choose any amount from £500 to £1,000 as his current year subscription. If, alternatively, he wishes to transfer his prior year subscription, he can transfer up to £3,000

innovate

Mikeyorks wrote: »

I simply don't follow that? You can pay in £5640 this year - it's immaterial what you take out.

LOL, DOH! Yes, you (and the nudeone) are of course right, it is as simple as that - £5,640 is the max contribution this year and it doesn't matter at all whether you withdraw all or nothing or something. Sorry for adding totally unnecessary confusion

Curious_Yellow_2

Sorry, I will clarify further.

I have an ISA which had a closing balance of about £5000 from last year. It is still active and I have paid in £1000 into it so far this year.

If I were to take out say, £2000, would that mean I'd only be able to contribute £3640 more, or can I contribute £4640 more before I hit the tax free limit for interest?

Xbigman

You can put another £4640 in. Forget what you take out, its what you put in that counts.




X

bigfreddiel

Curious_Yellow wrote: »

Hello all,

Quick question here.

I have an ISA from last year of about £5000 which I have continued saving into. Can I withdraw a sum of money from it without affecting this year's allowance?

Grateful for any advice!

i don't understand why you would be taking money out of an old isa when you want to pay into an isa - just don't pay in until you're ready.

fj

lisyloo

why you would be taking money out of an old isa when you want to pay into an isa

Perhaps the OP needs to withdraw now, but expects to be able to contribute later i.e. doesn't have the money to deposit right now.

Curious_Yellow_2

bigfreddiel wrote: »

i don't understand why you would be taking money out of an old isa when you want to pay into an isa - just don't pay in until you're ready.

fj

Simple really. There's something I need the money for, but I've not got a few thousand pounds hanging around in my current account to spend. So I want to dip into my ISA to do it.

The amount I pay into the ISA is a fixed amount I save every month.

My confusion arises from figuring out whether money taken out wouldn't count towards this year's allowance due to existing money from the previous year or not.

So in my case, I had a £5000 ISA at the end of the last tax year. I carried on saving into it and it is now £6000. I now need to take out £2000. Does this mean I can still save £4640 into it for this tax year, or can I only save £3640 into it as the £2000 withdrawal will be thought of as money withdrawn from this year's limit.

Apologies if this has been answered before. I've still not been able to figure it out from the answers given as there are some conflicting ones. If Xbigman is right (and I hope he/she is!) then that bodes well for me.

innovate

You can pay in max £5,640 this year.

It makes no difference whether you withdraw nothing, or all of your ISA, or some of your ISA.

The total max that you can pay in in 2012-2013 is £5,640.