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

gwapenut

Is it worth us collating a list of ISAs known to offer flexible withdrawals/reinstatement? Particularly when it applies to previous years' subscriptions

Plus

gwapenut wrote: »

Is it worth us collating a list of ISAs known to offer flexible withdrawals/reinstatement? Particularly when it applies to previous years' subscriptions

That could be handy, particularly since it's likely to be buried in small print which needs to be read carefully.

jimjames

gwapenut wrote: »

Is it worth us collating a list of ISAs known to offer flexible withdrawals/reinstatement? Particularly when it applies to previous years' subscriptions

If it's in the ISA regulations then all providers will have to allow it I'd expect

masonic

jimjames wrote: »

If it's in the ISA regulations then all providers will have to allow it I'd expect

If that is the case it will make a mockery of fixed term ISAs. If it only applies to 'easy access' ISAs, then will all providers need to offer one of these, and, if the rate is 0.1%, are they really offering a genuine choice for customers?

(obviously, in the context of alternative types of account, I don't think any cash ISA is a genuine choice)

Vortigern

jimjames wrote: »

If it's in the ISA regulations then all providers will have to allow it I'd expect

Baillie Gifford say they are not offering this flexibility in their investment trust ISAs.

The flexibility is probably relevant to cash ISAs only.

jimjames

masonic wrote: »

If that is the case it will make a mockery of fixed term ISAs. If it only applies to 'easy access' ISAs, then will all providers need to offer one of these, and, if the rate is 0.1%, are they really offering a genuine choice for customers?

I've never had one but don't all ISAs have to allow instant access albeit with a penalty if it's fixed rate?

masonic

jimjames wrote: »

I've never had one but don't all ISAs have to allow instant access albeit with a penalty if it's fixed rate?

Yes, it's true that you can take your money out of a cash ISA at any time, but in many cases money cannot be deposited into fixed rate ISAs after a certain cut-off date and in some cases withdrawing would automatically and irreversibly close the ISA. The new rules would change that quite significantly if they are to apply to all cash ISAs.

In fact, having just checked the draft ISA Guidance Notes document, it seems the answer is clear:

6.77 A flexible ISA is an ISA whose terms and conditions allow the investor to replace cash they have withdrawn, without the replacement counting towards their annual subscription limit.

Where a withdrawal is made, any subsequent subscriptions in the same tax year that would otherwise count towards the subscription limit will do so only to the to the extent that previously withdrawn amounts have been fully replaced.

6.78 Offering flexibility is optional for ISA managers. It is not available for Junior ISAs.

Flexibility can be offered in respect of cash only. It can be offered for cash ISAs and also in respect of cash held in a stocks and shares or an Innovative Finance ISA.

Interestingly, it does apply to cash held in all types of ISA.

gwapenut

gwapenut wrote: »

Is it worth us collating a list of ISAs known to offer flexible withdrawals/reinstatement? Particularly when it applies to previous years' subscriptions

OK, to get the ball rolling....

Coventry - Yes (source: web page)
Nationwide - Yes, from April (source: email)
National Counties - Plan to offer it later in the tax year but not now (email)
Lloyds - I've seen here that they do plan to offer it (ASAP?) (source:forum)
Virgin - Easy Access 1.1% only (source:forum)

Santander - No. (forum)
Cambridge - No. (email)

Ashen

From 6 April 2016 Santander ISAs will continue to work as they do today, we won’t be offering the additional flexibility.

Well, that's my ISA transferred out of Santander as soon as it matures then.

Now, I wonder if that decision could be related to people then choosing to move ISA cash in and out of their 123 account at the start and end of each tax year....

Shedman

Ashen wrote: »

Well, that's my ISA transferred out of Santander as soon as it matures then.

Now, I wonder if that decision could be related to people then choosing to move ISA cash in and out of their 123 account at the start and end of each tax year....

Likewise that's ours coming out of Santander.

Anybody know if it is better to transfer out to a new flexible ISA provider before the end of this tax year (in which case I need to get my skates on) or will it not matter if transferred across in new tax year. Don't want any risk of losing flexibility on the existing holding as what I want to achieve is to pull the existing monies out at some point in new tax year and shove in higher interest account (as well as any new subscription) whilst keeping the option to shove it all back in again at the end of next tax year (or at some point in between if I decide after Brexit vote that the markets have settled enough to transfer the cash to a S&S ISA)?