Cash Isa

tsmiggy54

I am looking for a easy access Cash Isa. I see that some say flexible, and others do not. Am i correct in thinking when it says flexible, i am able to withdraw money, and also put money back in. Whereas non flexible will not allow me to do this.

Equally if i was to open one Now. Would i be able to deposit £20000 either side of the financial year. The reason is purely down to not paying tax on my savings, if they were to exceed £1000.

Thanks

MikeJXE

Depending on your income you could be entitled to more than £1000 tax free 

eskbanker

tsmiggy54 said:

I am looking for a easy access Cash Isa. I see that some say flexible, and others do not. Am i correct in thinking when it says flexible, i am able to withdraw money, and also put money back in. Whereas non flexible will not allow me to do this.

All easy access cash ISAs allow you to withdraw and pay back in, but flexible ISAs allow you to do so without the redeposits counting towards your annual ISA contribution allowance: https://www.moneysavingexpert.com/savings/flexible-isas/

tsmiggy54 said:

Equally if i was to open one Now. Would i be able to deposit £20000 either side of the financial year.

Yes.

tsmiggy54 said:

The reason is purely down to not paying tax on my savings, if they were to exceed £1000.

The best approach is generally to consider how to optimise your net return, which may involve higher interest taxable accounts from which you'd potentially exceed the interest from a cash ISA, even after tax.

Expotter

Talking about flexible ISAs, does anyone know the answer to this question:
Say I open a flexible ISA in the current tax year, I deposit £20K and then withdraw £10k. Later I transfer this ISA to a different ISA, also flexible, can I still put the £10k back into it in the same tax year?

isasmurf

Yes. As far as the 2nd ISA is concerned they would only ever know you've subscribed £10k. They wouldn't know you've subscribed more then withdrawn some of it. It doesn't matter whether the 2nd ISA is flexible. 

You would not be able to do it if the withdrawn amount was previous year funds. 

Expotter

isasmurf said:

Yes. As far as the 2nd ISA is concerned they would only ever know you've subscribed £10k. They wouldn't know you've subscribed more then withdrawn some of it. It doesn't matter whether the 2nd ISA is flexible. 

You would not be able to do it if the withdrawn amount was previous year funds. 

You're right in thinking the 2nd bank wouldn't know, but the thing is, would HMRC know that I've already paid £20k this year and look at it as if I've paid £30k in total?

isasmurf

No. ISAs transferred out are not reported so HMRC would not know about the first ISA. 

Bank A would report to Bank B you've subscribed £10K. Bank B would report to HMRC you've subscribed £20K - the 10k reported to them by Bank A and the 10k you've put back in. 

Moneypot1

Can I withdraw out of my easy acess isa into my current account without losing the tax free status?
I need to use these funds. 

slinger2

Moneypot1 said:

Can I withdraw out of my easy acess isa into my current account without losing the tax free status?
I need to use these funds. 

I'm not 100% clear what you mean by "losing the tax free status". If you withdraw it, it's outside the ISA system. However, if your Cash ISA is "flexible" then you can replace the money withdrawn, back into the same ISA, as long as you replace it in the same tax year that you withdraw it. In that case the money replaced doesn't count towards your annual ISA allowance.

badger09

Moneypot1 said:

Can I withdraw out of my easy acess isa into my current account without losing the tax free status?
I need to use these funds. 

You only lose the tax free status (on the amount withdrawn) going forwards. But if you’re spending it, that’s irrelevant anyway. 

As slinger2 says, if it’s a Flexible ISA, you can replace the amount withdrawn, in the same tax year.