ISA deposit and removal after deadline

steveinkent

Hi

I have some funds that have come in to an account, and I'm wondering if it's possible to transfer that into my ISA to max it out for this year, then transfer the same sum back out so I can use it for the intended purpose. I don't know how or when the ISA interest is calculated - would I get any benefit from doing this?

Best
S

bowlhead99

No real point.

The advantage of an ISA is that there is no tax on interest earned while in the ISA. However, you may well find that during the time that the money's in the ISA, the amount of interest earned is not enough to have needed to have paid tax on even if you weren't protecting the interest from the taxman's clutches and just had it in a normal account.

And in a lot of cases the interest rates you can earn on non-ISA accounts are higher than the interest rates on ISAs anyway.

Really, the only reason to "max out" a cash ISA before the end of the 2016/17 tax year deadline is if you are planning to always be putting away £20k a year into ISAs every single year and building up £100k over the next five years with more spare money left on top. If you were doing that but didn't use this year's allowance you could be stuck with money that couldn't fit into an ISA, and be frustrated by having some money stuck outside earning a worse rate due to a high tax bill.

However, it sounds like you are not trying to max out the greatest possible money inside a tax wrapper over the next several years, and instead you're just going to quickly take the money out and spend it on something. So, there's no benefit to temporarily using an ISA.

Instead just keep it in the highest interest-rate-paying accounts you can find -maybe spread over several accounts to get the very best average interest rate you can, over the time between now and spending the money.

gt94sss2

There could be an advantage in what steveinkent suggests if he has a 'flexible ISA'.

This would allow him to max his ISA this year and withdraw and spend the money from 6 April - while being able to top up his ISA again - both with the money withdrawn and next years (upto) £20K allowance if desired.

It would mean he would preserve this years ISA allowance into next year as well as being able to access the 17/18 one.