Flexible Cash ISA Rules

RG2015

Thanks.

The deposit was added but then removed so it never appeared on the statement.

However, if they added the deposit before subtracting the earlier withdrawals, my balance would have triggered a breach of the balance brought forward from last tax year.

Qyburn

On your existing Flexible ISA, did the balance ever drop below the figure carried over from 21/22 to the current tax year?  For example ..
Start with £20k balance
Deposit £4k (balance £24k)
Withdraw £5k (balance £19k)
Deposit £5k (balance £24k)
Withdraw £4k (balance £20k)

I think in that case it would count as £1k new money.

masonic

Qyburn said:

On your existing Flexible ISA, did the balance ever drop below the figure carried over from 21/22 to the current tax year?  For example ..
Start with £20k balance
Deposit £4k (balance £24k)
Withdraw £5k (balance £19k)
Deposit £5k (balance £24k)
Withdraw £4k (balance £20k)

I think in that case it would count as £1k new money.

No, it would not. Both current and prior tax year subscriptions can be flexibly withdrawn and replaced within the tax year. Would be fine to withdraw the whole balance if desired. OP made it clear the flexible ISA in question never contained any 22/23 subscriptions.

RG2015

The balance at midnight on 5th April 2022 was £8,000 and at no time since has this figure been exceeded. Between 6th April and 28th February I have added and withdrawn on numerous occasions without any issues until 1st March.

The transactions on 1st March were as follows.

Opening balance                         £8,000
Withdrawal in the morning           £2,000
Deposit in the afternoon                  £500

The £500 deposit was initially added but the following morning it had disappeared from the ISA account. Towards the end of the day it appeared on the VM current account with the narrative "Branch Credit".

The ISA balance before the £500 deposit was £6,000, but it is possible that the VM system added the £500 before the £2,000 was subtracted. This would have given an apparent balance of £8,500 rather than £6,500, thus triggering the return of the £500 to the paying current account.

RG2015

masonic said:

RG2015 said:

masonic said:

RG2015 said:
The VM customer services person was adamant that I could not add any money to more than one cash isa in a single tax year.

This is true, but irrelevant, because you are not trying to add money, you are trying to replace money.

Sadly the combined VM ISA team took about an hour to not come to any conclusion.

They say they will get back to me but I fear it will be as @someone said above and my ISA status will not be resolved before 5th April.

That itself warrants a formal complaint (it cannot be considered acceptable that ISA-trained staff fail to understand how their own product works, given an hour to study the details), and if you are correct about them not reaching a conclusion within a month, then you might find yourself glad of having started the complaint clock sooner rather than later.

This is just further speculation, but it may be that they never respond.

Apart from the transaction sequence issue, the VM system appears to be solid and it is just the people that have issues with the rules.

I believe my best course of action is to fully return funds to the full amount I had at midnight on 5th April 2022 before the end of this tax year.

I will also ensure that I wait a day before returning funds if a mid-day balance breach could occur

masonic

RG2015 said:

masonic said:

RG2015 said:

masonic said:

RG2015 said:
The VM customer services person was adamant that I could not add any money to more than one cash isa in a single tax year.

This is true, but irrelevant, because you are not trying to add money, you are trying to replace money.

Sadly the combined VM ISA team took about an hour to not come to any conclusion.

They say they will get back to me but I fear it will be as @someone said above and my ISA status will not be resolved before 5th April.

That itself warrants a formal complaint (it cannot be considered acceptable that ISA-trained staff fail to understand how their own product works, given an hour to study the details), and if you are correct about them not reaching a conclusion within a month, then you might find yourself glad of having started the complaint clock sooner rather than later.

This is just further speculation, but it may be that they never respond.

Apart from the transaction sequence issue, the VM system appears to be solid and it is just the people that have issues with the rules.

I believe my best course of action is to fully return funds to the full amount I had at midnight on 5th April 2022 before the end of this tax year.

I will also ensure that I wait a day before returning funds if a mid-day balance breach could occur

It's possible they never respond, and also that your plan backfires and the money isn't treated as having been replaced (i.e. they continue to "Branch Credit" it, or if you try paying in late on 5th April to give them no time to do that, they disregard it as a contribution anyway). In that scenario, you'd be seeking compensation for that permanent loss of ISA status for these funds. You'd probably need to take it to the FOS to get a fair figure to reflect the impact over the rest of your life.

There's certainly no harm in just trying to make the deposit again now that there are no potential pending withdrawals. That's what I'd do.

RG2015

Just realised I never came back to report on the outcome for my VM easy access 4.76% ISA.

Everything worked out fine and I am still using the account up to the original year end balance. I have also subscribed to another VM ISA this year and opened a further one ready for next year.

4.76% is still better for me for easy access than non ISA easy access account, and equates to 5.95% before tax, as my PSA is fully utuilised with 6% to 8% accounts.