Withdrawing from a full ISA

Bravehearted_2

Is it possible to withdraw say 4k from a full ISA and return the 4k in about three days?

Does this do anything to the ISA, interest etc?

Many thanks

le_loup

What do the Terms and Conditions say? They will tell you - we can't unless you identify the provider and the type of account.

Linton

Any money you take out of an ISA loses its ISA status immediately. Money you put back is treated as new money, so if you already have used your full ISA allowance you cant do it. You can only put new money into the current year's ISA.

CLAPTON

presumably you are referring to a cash ISA?

you can only add 5640 to an ISA in this tax year

if you have already added 5640 in this tax year then once you withdraw 4k you can't put it back again until next tax year

if however you have only saved (say) 3,000 this tax year then you can deposit another 2,640 this tax year.

Bravehearted_2

Thanks. Yes it's a cash ISA.

It's weird how they won't let you put it back once removed - especially since its the same year's ISA.

Robin_TBW

The rules of an cash ISA state that you can only pay in £5,640 per tax year NOT that you can hold £5,640 in the account. You can have a shitload in the account as long as you're only paying in the maximum allowance for that tax year.

If you paid in the £4,000 last tax year (2011-12) then you can put it all back in again, but if you paid it all in since April 6th then you can only put in £1,640 - or a combination, as CLAPTON mentions.

Milarky

I'm going to be clever and say 'yes': if the ISA makes no restrictions on withdrawals and will accept further deposits, and the withdrawal is made on either the 3rd, 4th or 5th April, then your plan will work

[But hey, that's just me]

xylophone

http://www.hmrc.gov.uk/isa/faqs.htm#9
"Q. What if I want to take my money out?
A. You can take your money out at any time, without losing any tax benefits you have already built up. However, some ISAs may run for a fixed period or require notice of withdrawal and you may lose some interest or a bonus if you withdraw early. In some cases, there may also be a penalty if you surrender an ISA life insurance policy early. With stocks and shares or life insurance, you may not get back all the money you put in, particularly if you withdraw during the early years of an investment.

If you take money out, any that you put back later will count against your ISA annual subscription limit in the year that you re-invest your money."

innovate

It's very simple - the maximum you can deposit in any one financial year is your allowance for that financial year (e.g. £5,640 in 2012-13).

The annual allowance is independent of any withdrawals you might make.

Bravehearted_2

My point is this: the essence of a cash ISA is to save up to 5640 and have the interest untaxed.

Why should it matter if withdraw then replace any of it?

I'm a bit unhappy to be honest. I had filled the ISA some time ago and because my other easy access savings account takes 3 days to make a withdrawal this time of year, I've had to withdraw 3k from the ISA. And of course I can't refill that 3k when I get it back on Friday.

So when it matures, I'll earn 4% on the remaining 2640 instead of 5640. Sorry about ranting, I should be thankful rather than sulking, others have it worse.

innovate

You get your ISA interest tax free, which is a perk. Like any higher interest rate deals, there is a price to such perks. In the case of instant access cash ISAs, the price is that you cannot deposit more than your annual allowance in any one year. That's been the rules (the law, actually) for over a decade. Sorry.