ISA and accessing the money

Lil_Missy

Just managed to watch the ISA special show. Really good and explained ISAs very well.

If I transfer my ISA (or just keep the one I have and add money to it for the new ISA year) when I need to withdraw money will that come out of the "protected" ISA money from previous years or does it come off the new money I put in?

(Or does it not really matter in the long run and so this is a stupid question)

Sensory

From my understanding, it doesn't really matter, as it will not affect how much you can deposit per year.

The entirety of your current year's subscription must be kept together when transferring, and that amount is equal to the amount deposited for the current year (example 1), unless your balance has dropped below that amount due to withdrawals (example 2).

Example 1
ISA has a balance of £8640 made up of:
£5640 (2012/2013)
£3000 (2013/2014)

If you withdrew £3000, and then wished to transfer your current year's subscription to another ISA provider, you could (and would have to) transfer £3000 (the amount deposited for the current year), and the remaining balance in the old ISA would be £2640.

You may want to do this because the new ISA provider has a better rate, but doesn't allow funds from previous tax years to be transferred in.

Example 2
If you withdrew £7000, and then wished to transfer your current year's subscription to another ISA provider, you would only be able to transfer the whole remaining balance of £1640, and would only be able to deposit a further £2760 (5760 - 3000).

I suppose one could argue then that withdrawals count against the earliest balances first.

saintalan

Lil_Missy wrote: »

Just managed to watch the ISA special show. Really good and explained ISAs very well.

If I transfer my ISA (or just keep the one I have and add money to it for the new ISA year) when I need to withdraw money will that come out of the "protected" ISA money from previous years or does it come off the new money I put in?

(Or does it not really matter in the long run and so this is a stupid question)

Hi, all money in your ISA/ISAs is protected until you withdraw it, so basically you are withdrawing from the same pot.

Just be careful if you add this years money to an old pot, that it allows new money, if not it will have to go in a new ISA anyway.

Remember if you withdraw money from either pot you can not put it back. Of course if you have not reached this years limit you can still add to that providing the total deposits made in the year is within limit.

Hope that helps.

Alan

Lil_Missy

Thanks to both of you replying.

Makes a bit more sense. Before watching that show I did not understand ISAs at all.

saintalan

Lil_Missy wrote: »

Thanks to both of you replying.

Makes a bit more sense. Before watching that show I did not understand ISAs at all.

Don't worry even though I feel comfortable offering help here, I still often have to clarify certain things. Also once I switch off, normally when I have done mine for the year, it takes me a while to get my head around it again.

Thanks

Alan

innovate

It doesn't matter, and you can't tell which year's money you have withdrawn

Your annual allowance is not affected by withdrawals in any way. It is only affected by deposits.