IFISA to cash ISA transfer same year

richard_jones

Hi, can anyone help! I want to withdraw money from IFISA and put it into a cash ISA in the same year. The question I ask is, if I withdraw 10k (20k currently invested in isa), can I transfer the 10k withdrawn into a cash isa, without exceeding my 20k allowance. ie 20k into IFISA, 10K out, leaving 10Kin IFISA. 10k into cash ISA, all in same year. Can I do this without exceeding 20k allowance. Any help much appreciated.

eskbanker

Provided you pick a cash ISA that accepts inward transfers, and then use that provider's ISA transfer process, then yes, you can move funds from one ISA to the other without breaching the annual £20K allowance.

Edit: this isn't an accurate enough answer given the rule about keeping current year subs together, see masonic's post below....

richard_jones

Thanks for your help, very useful

Reaper

I think it has been covered above but just to make sure it is clear whatever you do don't WITHDRAW, only TRANSFER.

If you withdraw money from an ISA and put it back into another ISA you will use up your annual limit, whereas transfers are unlimited.

masonic

This cannot be done via a formal ISA transfer if the £20k in the IFISA was paid in using this year's allowance. Current year money must be transferred in full, so it's the whole £20k or nothing (unless you wait until after 5th April).

However, if your IFISA is flexible, you can simply flexibly withdraw the £10k and pay it into a cash ISA.

DavidT67

OK, just to confirm this.

I've a Flexible IFISA with £20K subscribed this Financial year.
It is acceptable to withdrawal £10K from the IFISA which resets the unused allowance to £10K
Then I can open a new non-flexible Cash ISA with the £10K this Financial year..

TIA

Reaper

DavidT67 wrote: »

OK, just to confirm this.

I've a Flexible IFISA with £20K subscribed this Financial year.
It is acceptable to withdrawal £10K from the IFISA which resets the unused allowance to £10K
Then I can open a new non-flexible Cash ISA with the £10K this Financial year..

TIA

No. If you want to transfer any of the money put in this financial year then you have to transfer all of it.
Details here:
https://www.gov.uk/individual-savings-accounts/transferring-your-isa

If you are transferring an older ISA then you can transfer part of it.

And don't withdraw if you want to avoid losing the tax shelter. You must transfer instead.

masonic

DavidT67 wrote: »

OK, just to confirm this.

I've a Flexible IFISA with £20K subscribed this Financial year.
It is acceptable to withdrawal £10K from the IFISA which resets the unused allowance to £10K
Then I can open a new non-flexible Cash ISA with the £10K this Financial year..

TIA

Yes that's correct.

Reaper wrote: »

No. If you want to transfer any of the money put in this financial year then you have to transfer all of it.
Details here:
https://www.gov.uk/individual-savings-accounts/transferring-your-isa

If you are transferring an older ISA then you can transfer part of it.

And don't withdraw if you want to avoid losing the tax shelter. You must transfer instead.

No, that's incorrect. You can withdraw it from a flexible ISA without losing the tax shelter, see https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#f-isa

"A flexible ISA is an ISA whose terms and conditions allow the investor to replace, in whole or in part, cash they have withdrawn, without the replacement counting towards their annual subscription limit. No changes are needed to the model application forms in applications and terms and conditions.

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."

"Withdrawals of current year subscriptions, can effectively be replaced in any current year ISA, but cannot breach the ‘one ISA of each type per tax year’ rule."

Reaper

Thanks. I see I need to read up on flexible ISAs.