MSE News: Budget 2015: ISAs to become fully flexible with withdrawals allowed

ISA savers will soon have the flexibility to be able to take money out of their ISAs and put it back in ...
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Budget 2015: ISAs to become fully flexible with withdrawals allowed'

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  • edited 18 March 2015 at 6:51PM
    jamesdjamesd Forumite
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    edited 18 March 2015 at 6:51PM
    The measure only applies to cash ISAs, not S&S ISAs.

    It's too soon to say whether it will be possible to transfer a couple of million Pounds from a S&S ISA to a cash ISA, withdraw it all in May and pay it back in in March.

    Later, added the quote from Budget 2015 page 58:

    "1.225 The government will allow ISA savers to withdraw and replace money from their cash ISA without counting towards their annual ISA subscription limit for that year, as long as the repayment is made in the same tax year as the withdrawal. This will enable savers to access their ISA savings more flexibly without losing the benefits they have built up. These changes will be introduced in autumn 2015, following consultation with ISA providers."
  • eltacanoeltacano Forumite
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    Has there been an official announcement re this restriction? Your workaround makes perfect sense, and would make any such restriction pointless.
  • Ed-1Ed-1 Forumite
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    jamesd wrote: »
    The measure only applies to cash ISAs, not S&S ISAs.

    It's too soon to say whether it will be possible to transfer a couple of million Pounds from a S&S ISA to a cash ISA, withdraw it all in May and pay it back in in March.

    How can you pay it all back in when your ISA allowance is £15240? Paying it back in would contribute as new money. The change only applies to new money that has been subscribed in that tax year that can be withdrawn and then resubscribed in the same tax year.
  • kidmugsykidmugsy Forumite
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    jamesd wrote: »
    The measure only applies to cash ISAs, not S&S ISAs.

    It's too soon to say whether it will be possible to transfer a couple of million Pounds from a S&S ISA to a cash ISA, withdraw it all in May and pay it back in in March.

    As long as it's a spare couple of mill.....: hang on, you're teasing about Ed Mibiland, aren't you? He doesn't own his mansion, you know; he married money.
    Free the dunston one next time too.
  • jimjamesjimjames Forumite
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    eltacano wrote: »
    Has there been an official announcement re this restriction? Your workaround makes perfect sense, and would make any such restriction pointless.

    Flexibility only works for current years subscription. Probably the reason it doesn't work for S&S ISAs is that the value would fluctuate daily so amount taken out might be more than the allowance.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • tdreedtdreed Forumite
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    How about Cash in a S&S ISA?
  • jamesdjamesd Forumite
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    eltacano wrote: »
    Has there been an official announcement re this restriction? Your workaround makes perfect sense, and would make any such restriction pointless.
    Budget 2015 page 58:

    "1.225 The government will allow ISA savers to withdraw and replace money from their cash ISA without counting towards their annual ISA subscription limit for that year, as long as the repayment is made in the same tax year as the withdrawal. This will enable savers to access their ISA savings more flexibly without losing the benefits they have built up. These changes will be introduced in autumn 2015, following consultation with ISA providers."
    Ed-1 wrote: »
    How can you pay it all back in when your ISA allowance is £15240?
    By having the cash ISA provider track how much has been taken out of the account and allowing paying that much back in without it being counted towards the subscription limit. There's no limit on how much could be taken out an paid in if this sort of system is used, other than the practical one of the largest amount anyone has in any ISA account.
    Ed-1 wrote: »
    Paying it back in would contribute as new money. The change only applies to new money that has been subscribed in that tax year that can be withdrawn and then resubscribed in the same tax year.
    Please provide your source for this claim.
  • colstencolsten Forumite
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    jamesd wrote: »

    By having the cash ISA provider track how much has been taken out of the account and allowing paying that much back in without it being counted towards the subscription limit. There's no limit on how much could be taken out an paid in if this sort of system is used, other than the practical one of the largest amount anyone has in any ISA account.
    The duty of tracking will remain with the account holder. No ISA provider can conclusively tell you what your remaining allowance is as they don't know whether you have contributed to both, cash and S&S.

    Obviously, if you only do cash, or only S&S, then the guess-timate by the ISA provider will be correct if they provide more than simple Marketing messages like "use your ISA allowance blah blah".

    It shouldn't really be onerous for account holders to figure out how much of the annual allowance has been used..............
  • jamesdjamesd Forumite
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    Providers are already required to track how much of our annual allowance you have used with them and prevent you from exceeding it with them. I agree that it's still possible to go over the limit with more than one account, something that HMRC catches after the providers file their annual reports with HMRC. I'm sure that HMRC will want providers to continue to enforce the limit as they do now, to the extent that they can.
  • I have a cash ISA that I consolidated all my previous cash ISAs into a few years ago via transfers. I haven't made any contributions to it in the last 3 years. Does this mean that I would be able to withdraw say £50k from it on 6 April 2016 and then be able to put the £50k back as long as I did it before 6 April 2017? I haven't been able to find full official details of the new flexibility - are they out there somewhere or is this just a top of the head headline grabber that will probably come to nothing when the ISA providers tell George they aren't interested in playing along?
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