Flexible ISAs guide

PowerSavingMode

eskbanker said:

PowerSavingMode said:

Withdrawing and depositing across flexible cash ISAs

If I opened a flexible cash ISA earlier this tax year and withdrew, say, the full £20,000 — would I now be able to open another flexible cash ISA and deposit £10K in that and £10K in the older flexible cash ISA? Or does it have to go back into the flexible cash ISA I withdrew from initially? (Hope this makes sense!)

As highlighted prominently in the article this thread is here to discuss:

You must replace the money in the same ISA

The key rule is you must replace the money in the same ISA account you took it out from, otherwise the deposit will count towards your £20,000 annual limit.

Thanks. I thought I'd had a look at that linked page, before, but obviously managed to miss that bit entirely.

So, to be clear, while the limit is shared across ISAs, the flexibility is not — in that I can't "put back" funds into a different flexible ISA, only the one I withdrew from? 

(I'm not even going to ask about withdrawing from previous years' allowances!)

eskbanker

PowerSavingMode said:

So, to be clear, while the limit is shared across ISAs, the flexibility is not — in that I can't "put back" funds into a different flexible ISA, only the one I withdrew from?

You can put the money where you like, but if depositing it into an ISA, the only way to avoid it being treated as new current year money is to replace it into the same ISA from which it was withdrawn.

There was more flexibility prior to this tax year but it was tightened up....

slinger2

One of the most important things about a flexible ISA is that you need to replace the money in the same tax year that you withdrew it (otherwise it'll count as the current year's money). When the money originally went in is not important in most cases. So if you had an ISA with £50k in from various earlier tax years, you could withdraw the £50k and replace it later in the tax year.

masonic

PowerSavingMode said:

(I'm not even going to ask about withdrawing from previous years' allowances!)

There is no difference for previous years' allowances. Both current and prior years work the same since the recent rule change.

Wolfie0000

Good day,

I opened a cash ISA with 212 in 2024. 

Over  that period I have had the full amount in, but withdrawn and replaced amounts as I can, at the moment it is full. 

I have a NS & I account, but want to transfer the money from there in to a ISA so I earn interest on the money, then transfer the ISA’s back each month before the draw. 

Basically, I want to utilise the most interest for my money instead of it sitting in premium bonds earning nothing, but adding for the prize draw. The reason is as of each year I’ve had the bonds, I’ve won on average £175-200 per month in the draw, making it worth the gamble. 

So I need the ability to access ISA’s as and when, along with adding as and when I can with no penalties. 

I have more than the maximum for a single isa in this tax year, but of course want to maximise interest, move as I wish, add as I can. 

Can I only add £20k to each years ISA, or add more tax free?

Not a money/numbers person, so struggling here….. I am reading you can add more than £20k in previous ISA’s, or am I mistaken please?

May I ask which should I look at and compare? 

Kindest regards. 

masonic

Wolfie0000 said:

Good day,

I opened a cash ISA with 212 in 2024. 

Over  that period I have had the full amount in, but withdrawn and replaced amounts as I can, at the moment it is full. 

I have a NS & I account, but want to transfer the money from there in to a ISA so I earn interest on the money, then transfer the ISA’s back each month before the draw. 

Basically, I want to utilise the most interest for my money instead of it sitting in premium bonds earning nothing, but adding for the prize draw. The reason is as of each year I’ve had the bonds, I’ve won on average £175-200 per month in the draw, making it worth the gamble. 

So I need the ability to access ISA’s as and when, along with adding as and when I can with no penalties. 

I have more than the maximum for a single isa in this tax year, but of course want to maximise interest, move as I wish, add as I can. 

Can I only add £20k to each years ISA, or add more tax free?

Not a money/numbers person, so struggling here….. I am reading you can add more than £20k in previous ISA’s, or am I mistaken please?

May I ask which should I look at and compare? 

Kindest regards. 

If I am understanding correctly, the fatal flaw in this scheme is that premium bonds must have been held for a full calendar month before they become eligible for entry into the draw. You cannot earn interest on the money in an ISA and benefit from the prize draw with the same money.

badger09

@Wolfie0000

You can pay max £20k of new money into ISAs each tax year. 

Money transferred between ISAs, (using new ISA provider’s process) doesn’t affect this. 

Any money withdrawn from Flexible ISAs must be returned by the end of the same tax year.  

PowerSavingMode

badger09 said:

@Wolfie0000

You can pay max £20k of new money into ISAs each tax year. 

Money transferred between ISAs, (using new ISA provider’s process) doesn’t affect this. 

Any money withdrawn from Flexible ISAs must be returned by the end of the same tax year.  

"Any money withdrawn from Flexible ISAs must be returned by the end of the same tax year." Must it be returned to the SAME provider, or, let's say I transferred to another flexible ISA with another provider, can it be returned there? I think it's the former, but I also believe recent changes have confused me.

eskbanker

PowerSavingMode said:

badger09 said:

@Wolfie0000

You can pay max £20k of new money into ISAs each tax year. 

Money transferred between ISAs, (using new ISA provider’s process) doesn’t affect this. 

Any money withdrawn from Flexible ISAs must be returned by the end of the same tax year.  

"Any money withdrawn from Flexible ISAs must be returned by the end of the same tax year." Must it be returned to the SAME provider, or, let's say I transferred to another flexible ISA with another provider, can it be returned there? I think it's the former, but I also believe recent changes have confused me.

Current year money can be returned to any ISA, but prior year money must be returned to the same one it was withdrawn from.

PowerSavingMode

eskbanker said:

PowerSavingMode said:

badger09 said:

@Wolfie0000

You can pay max £20k of new money into ISAs each tax year. 

Money transferred between ISAs, (using new ISA provider’s process) doesn’t affect this. 

Any money withdrawn from Flexible ISAs must be returned by the end of the same tax year.  

"Any money withdrawn from Flexible ISAs must be returned by the end of the same tax year." Must it be returned to the SAME provider, or, let's say I transferred to another flexible ISA with another provider, can it be returned there? I think it's the former, but I also believe recent changes have confused me.

Current year money can be returned to any ISA, but prior year money must be returned to the same one it was withdrawn from.

Thank you. That is very helpful.