Can I take money out and put it back into a Santander Cash ISA?

TheLondoner

Hi,

I have maxed out my isa allowance for this year. I then realised i'm not getting the best interest rate so I called santander and asked them if I was allowed to take the money out and put it into the esaver which pays 2.72%, and then transfer it back before the tax  year ends in april. I made it clear what I was trying to understand was whether I would effectively lose my allowance or whether I would be able to move 20k back into the cash ISA. The customer service guy said after checking with his colleagues, "yes you will be able to move money back before the tax year". 

Now, whilst browsing the mse website this morning I came across a page where it says the Santander Cash ISA is NOT flexible. My understanding of this means that once you take the money out, you lose the allowance for the year. I.e. I've lost my £20k allowance. Is that the case or is what santander told me over the phone accurate (i.e. I can still put back the £20k before the tax year ends?

Thanks. 

RobM99

Can you transfer into another provider? That might be the best way.

km1500

You would be better off checking if your Isa is flexible by asking santander again.

 If it may depend on exactly which issue of Isa you have as some may be flexible and others may not be

xylophone

Now, whilst browsing the mse website this morning I came across a page where it says the Santander Cash ISA is NOT flexible. 

You should check the terms and conditions relating to your particular ISA.

Example

https://www.santander.co.uk/personal/savings-and-investments/isas/eisa

We aren’t offering additional flexibility on ISAs but some providers are offering this feature. Those providers may allow you to replace funds that you have withdrawn with them without affecting the ISA limit.

See

https://www.moneysavingexpert.com/savings/flexible-isas/

You could consider transferring the Santander ISA to a provider offering a flexible product.

You could then move money from the new ISA to the Santander savings account and then back again before the end of the tax year?

TheLondoner

xylophone said:

Now, whilst browsing the mse website this morning I came across a page where it says the Santander Cash ISA is NOT flexible. 

You should check the terms and conditions relating to your particular ISA.

Example

https://www.santander.co.uk/personal/savings-and-investments/isas/eisa

We aren’t offering additional flexibility on ISAs but some providers are offering this feature. Those providers may allow you to replace funds that you have withdrawn with them without affecting the ISA limit.

See

https://www.moneysavingexpert.com/savings/flexible-isas/

You could consider transferring the Santander ISA to a provider offering a flexible product.

You could then move money from the new ISA to the Santander savings account and then back again before the end of the tax year?

Unfortunately i’ve already removed the funds. Will be calling/complaining to Santander today. Hopefully they have a recording of the call so they can review if needed.

I hope I can reuse the allowance. If not then is there a way around it? Ie if I switch the santander isa to somewhere else which is flexible like virgin money, will I be able to put the money I withdrew back do you know? Or is it a case of once it’s out of a non flexible ISA your allowance is gone? 

FatherTireseus

From what I know about ISAs:

You're allowed to put £20k of 'new money' into ISAs each year (and transfer existing ones between providers without affecting the £20k allowance).

You can only replace money withdrawn from a cash ISA if it is designated as a 'flexible' ISA.  Otherwise withdrawals lose their tax free status. 

The Santander easy access ISA (which I presume is that you gave) isn't a flexible one.

The question on whether you can transfer to a new provider who offers flexible ones and replace the money is an interesting one, but my gut feel is that it would be regarded as putting in new money.  Besides you can only subscribe to one type of ISA each year (cash, stocks and shares,  innovative finance).  So if you had put any money at all into a cash ISA with any provider in this tax year, you wouldn't be allowed to put money into a new cash ISA with a second provider before April 6th 2023.

So my feeling is that yes, unfortunately you probably have lost your allowance for the year.  I must admit I'm not sure if Santander could even allow you to replace the funds even if they admitted one of their staff had given you duff advice.   It might be once the money is withdrawn it can't be replaced under any circumstances.  In which case you'd probably be looking at pursuing a complaint against Santander.

On a different note it's scary how so badly informed some customer service staff seem to be.

Dobbibill

Can you try transferring £1 or similar amount back into the ISA before you ring to complain? If it rejects then consider ringing them, if it accepts your £1 then it would appear it's a flexible ISA. (assuming you have used every penny of your allowance for this tax year)

TheLondoner

Dobbibill said:

Can you try transferring £1 or similar amount back into the ISA before you ring to complain? If it rejects then consider ringing them, if it accepts your £1 then it would appear it's a flexible ISA. (assuming you have used every penny of your allowance for this tax year)

It's 100% not flexible. I called the ISA team today and the lady told me that Santander do not allow you to put money back into the ISA in the same tax year. So basically the guy I spoke to last week misinformed me. Luckily they do have a recording of the call and the complaints guy said he'd listen to the call and if it transpires it was their error, they'd look to allow me to get the money back into the ISA, after which I'm moving it out of Santander. It's so frustrating they let this kind of stuff happen. I literally asked the guy to check with someone else and asked "are you sure I can move the money back in before the new tax year". How can they just give people wrong advice like this? Ridiculously incompetent!

TheLondoner

FatherTireseus said:

From what I know about ISAs:

You're allowed to put £20k of 'new money' into ISAs each year (and transfer existing ones between providers without affecting the £20k allowance).

You can only replace money withdrawn from a cash ISA if it is designated as a 'flexible' ISA.  Otherwise withdrawals lose their tax free status. 

The Santander easy access ISA (which I presume is that you gave) isn't a flexible one.

The question on whether you can transfer to a new provider who offers flexible ones and replace the money is an interesting one, but my gut feel is that it would be regarded as putting in new money.  Besides you can only subscribe to one type of ISA each year (cash, stocks and shares,  innovative finance).  So if you had put any money at all into a cash ISA with any provider in this tax year, you wouldn't be allowed to put money into a new cash ISA with a second provider before April 6th 2023.

So my feeling is that yes, unfortunately you probably have lost your allowance for the year.  I must admit I'm not sure if Santander could even allow you to replace the funds even if they admitted one of their staff had given you duff advice.   It might be once the money is withdrawn it can't be replaced under any circumstances.  In which case you'd probably be looking at pursuing a complaint against Santander.

On a different note it's scary how so badly informed some customer service staff seem to be.

Another thought crossed my mind. What about if I put it all into a stocks and shares isa? or IFISA? Main question I have is whether i've lost that allowance altogether, or just lost it with Santander. 

On another note, I did file a formal complaint today and they have luckily got a recording of the call saved so they'll be able to listen to it and hopefully allow me to put the money back in if they agree they were at fault and misinformed me, which they did because I wouldn't do something so reckless willy-nilly. If only they were able to put something in writing so customers have a leg to stand on instead of relying purely on the off-chance these big banks keep recordings of the calls. 

refluxer

TheLondoner said:

Another thought crossed my mind. What about if I put it all into a stocks and shares isa? or IFISA? Main question I have is whether i've lost that allowance altogether, or just lost it with Santander. 

The £20k ISA allowance applies across all providers and all different types of ISA so if you've put £20k in a Cash ISA with Santander, then there will be nothing left from your allowance to put into a Cash ISA with a different provider or an ISA of a different type (eg. a Stocks & Shares ISA) during the current tax year.

Hopefully Santander can rectify their mistake though. 

TheLondoner

refluxer said:

TheLondoner said:

Another thought crossed my mind. What about if I put it all into a stocks and shares isa? or IFISA? Main question I have is whether i've lost that allowance altogether, or just lost it with Santander. 

The £20k ISA allowance applies across all providers and all different types of ISA so if you've put £20k in a Cash ISA with Santander, then there will be nothing left from your allowance to put into a Cash ISA with a different provider or an ISA of a different type (eg. a Stocks & Shares ISA) during the current tax year.

Hopefully Santander can rectify their mistake though. 

I meant that if £20k is out, then is that £20k allowance available in another type of isa that i've not subscribed to this year (stocks or ifisa). Either way, hopefully Santander allow me to deposit the funds back!