ISA transfer rules

badger09

Effectively what you’ve done is withdraw all your current year’s subscriptions plus £300 of previous year’s subscriptions.  

If you don’t replace that £300 before initiating the xfer, you’ll lose the ability to pay it back into your ISA ‘pot’. However, I’m fairly sure you’ll still be able to pay up to £20k into the new ISA. 
Currently Halifax are showing your remaining allowance balance as £20300. Post transfer, your new allowance balance will be £20k. 

I think😉

Would be good to have this confirmed

bobblebob

Thanks. Yea thats what i thought would happen and im happy with that, but seems even Halifax are not 100% sure

refluxer

I'm not sure about that. You can only retain the tax-free, ISA status of any cash withdrawn from a flexible cash ISA if the money is returned to the same ISA before the end of the current tax year. Therefore it seems to me that, almost by definition, any money that is not returned to a flexible ISA before a full transfer takes place will be lost from the £20k allowance.  

In your case, it's currently showing a remaining allowance of £20,300 because it would be possible to pay that whole amount into that particular ISA due to it being flexible. If the balance was transferred before the cash is replaced, then I would have thought you'd only be able to pay £17,300 into the new one due to having already used up £2.7k of this tax year's ISA allowance (see the quote in bold below)

That would be my understanding, at least. I've never used ISAs in this way so I have no personal experience of this.

From : https://www.unbiased.co.uk/discover/personal-finance/savings-investing/what-is-a-flexible-isa-and-how-does-it-work

Flexible ISA rules

"The key hard and fast rule with a flexible ISA is that you must return the money you withdrew to the same ISA account you took it from. 

Also, if you decide to transfer all of your ISA to another provider, you won’t be able to repay the funds that you have withdrawn. Any payments you make must come from any remaining ISA allowance you may have."

As I previously mentioned though, one possible get-around might be if you move from one flexible ISA to another with the same provider. Only the Halifax would be able to confirm if that's possible though.

Of course if it's likely that you'll never get anywhere near the £20k limit, then this might not matter anyway. One thing it might be worth looking at though is whether you're actually getting a benefit from an ISA if you're only holding fairly modest sums within it for short periods of time ?  

bobblebob

Yea i fixed a large amount in a fixed savings (back when savings were paying more than ISA's)

Now ISA are going up again i thought i would stick the remaining in the Halifax flexible Bonus saver as the money in my current Halifax ISA only pays 1.5%

The main reason for starting the thread is alot of sites say the flexible ISA rules is you MUST replace the money withdrawn. I just didnt want to transfer, not do that and possibly have HMRC on me for breaking a rule or something

Catbells

(I posted this on another thread before I saw this one).
I'd like to transfer £20k from Fidelity Stocks and Shares ISA into a cash ISA.  Is this straightforward to do?  And any suggestions as to which cash ISA is the best.  I already have one with Yorkshire Building Society and one with Skipton which I could add to but not sure if they will do this from S&S ISA.  Thanks.

Doctor_Who

bobblebob said:

Yea i fixed a large amount in a fixed savings (back when savings were paying more than ISA's)

Now ISA are going up again i thought i would stick the remaining in the Halifax flexible Bonus saver as the money in my current Halifax ISA only pays 1.5%

The main reason for starting the thread is alot of sites say the flexible ISA rules is you MUST replace the money withdrawn. I just didnt want to transfer, not do that and possibly have HMRC on me for breaking a rule or something

I don't think you have to replace any money withdrawn from a flexible ISA. It's just that if you want the withdrawn money to retain its ISA status then it must be returned to the same flexible ISA in the same tax year.

As you've said you're not concerned about the £300 you've withdrawn being returned to the ISA, then I would just go ahead with the transfer.

bobblebob

Just renewed, everything stayed the same in terms of allowance (still £20,300). Interest now 4.02%

badger09

bobblebob said:

Just renewed, everything stayed the same in terms of allowance (still £20,300). Interest now 4.02%

That’s interesting. I wonder how Halifax would explain this. 

bobblebob

May as its Halifax flexible to Halifax flexible ISA? Dunno

Doctor_Who

badger09 said:

bobblebob said:

Just renewed, everything stayed the same in terms of allowance (still £20,300). Interest now 4.02%

That’s interesting. I wonder how Halifax would explain this. 

The OP said 'renewed', I wonder if the 'new' flexible ISA has the same account details (account number/roll number etc) as the 'old' flexible ISA and Halifax has just changed the interest rate?