Tax free savings

refluxer

justwantedtosay said:

If anyone's still thinking about cash ISAs, I've just been told by a building society that if you transfer, say, £10k of previous years' money out of a cash ISA you can then replace it with new money in addition to your £20k limit and thereby save £30k, in this case, of new money in one tax year. Can that be right?

No, I think you've misunderstood. Your can only pay up to £20k of 'new money' into a Cash ISA in any one tax year - there is no way of getting around this.

Were they talking about flexible ISAs ? If so, then this allows money to be withdrawn and paid back but the £20k subscription limit (per tax year) still applies.

In the example you gave, if the ISA you withdraw from is flexible and consists of subscriptions from previous tax years, then withdrawing £10k and paying £30k back in would be possible but that isn't the same as paying in £30k of new subscriptions during the current tax year - you're essentially returning the £10k you took out, plus paying in £20k from your 22-23 tax year allowance.

If you're talking about transferring that £10k away and into another ISA, then the max you can pay into any ISA is still limited to £20k for this tax year.

eskbanker

justwantedtosay said:

If anyone's still thinking about cash ISAs, I've just been told by a building society that if you transfer, say, £10k of previous years' money out of a cash ISA you can then replace it with new money in addition to your £20k limit and thereby save £30k, in this case, of new money in one tax year. Can that be right?

As above, it appears that you've misunderstood, but the bottom line is that (ignoring capital growth, dividends, interest, or LISA bonuses) your total balance in ISAs can only increase by £20K per tax year....

justwantedtosay

refluxer said:

justwantedtosay said:

If anyone's still thinking about cash ISAs, I've just been told by a building society that if you transfer, say, £10k of previous years' money out of a cash ISA you can then replace it with new money in addition to your £20k limit and thereby save £30k, in this case, of new money in one tax year. Can that be right?

No, I think you've misunderstood. Your can only pay up to £20k of 'new money' into a Cash ISA in any one tax year - there is no way of getting around this.

Were they talking about flexible ISAs ? If so, then this allows money to be withdrawn and paid back but the £20k subscription limit (per tax year) still applies.

In the example you gave, if the ISA you withdraw from is flexible and consists of subscriptions from previous tax years, then withdrawing £10k and paying £30k back in would be possible but that isn't the same as paying in £30k of new subscriptions during the current tax year - you're essentially returning the £10k you took out, plus paying in £20k from your 22-23 tax year allowance.

If you're talking about transferring that £10k away and into another ISA, then the max you can pay into any ISA is still limited to £20k for this tax year.

That's what I thought. It wasn't me misunderstanding but the lass at the building society. I asked a second time to make sure and she gave the same answer. She must have just given the stock answer regarding withdrawing money rather than transferring it. 

Band7

justwantedtosay said:

If anyone's still thinking about cash ISAs, I've just been told by a building society that if you transfer, say, £10k of previous years' money out of a cash ISA you can then replace it with new money in addition to your £20k limit and thereby save £30k, in this case, of new money in one tax year. Can that be right?

You were either told false information or you misunderstood. Your annual ISA allowance is £20k, which is the maximum amount of new money you can deposit. Some ISAs are known as flexible ISAs (refer to the T&Cs), which allow you to withdraw funds and replace them again in the same tax year. Such replacement is not new money, and your annual ISA allowance is not affected by replacements. Obviously, the total sum paid into an ISA could exceed £20k if you choose to withdraw and replace, partially or in full, previously deposited into a flexible ISA. 

For a more detailed explanation see https://www.moneysavingexpert.com/savings/flexible-isas/