Autumn statement - ISA rule changes from April 2024

masonic

surreysaver said:

masonic said:

surreysaver said:

refluxer said:

surreysaver said:

I wonder how this would work with flexible ISAs. I've currently got £20k sitting in a flexible cash ISA that I've put in this year, as well as subscribing to a S&S ISA. As long as I take out of my cash ISA an equivalent amount that I've paid into my S&S ISA before the end of the tax year, this is acceptable.
What will stop people paying into multiple flexible ISAs during the course of the year, but then withdrawing from them before 5th April?

I'm wondering if I've misunderstood ? Anyone who pays more than £20k of new subscriptions in total into any combination of ISAs of any type in the same tax year will have broken the £20k ISA limit rule and therefore made a false statement on any cash ISA declarations, regardless of the state of play at the end of the tax year or whether that's now or during the next tax year (after the rule changes).

"I declare that I have not subscribed/made a payment to and will not subscribe/make a payment more than the overall subscription limit in total to any combination of permitted ISA types in the same tax year"

You have misunderstood. Here's the thread started by myself earlier this year
https://forums.moneysavingexpert.com/discussion/6438967/flexible-cash-isa-plus-stocks-shares-isa

This article on MSE is wrong, as you cannot have a flexible S&S ISA

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

Here is the HMRC page
https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#flexible-isas

I'm not sure what it is exactly that you think @refluxer has misunderstood. It is certainly the case, as was discussed in your other thread, that to be compliant with the ISA declaration, you must not at any time exceed the overall subscription limit within a single tax year.

I'm also not sure what specifically within the MSE article you think is wrong. You can have a flexible S&S ISA, and in fact two major providers offer them (Vanguard and Charles Stanley Direct). There are probably others who escape me at this time.

The HMRC text that you have screenshotted refers to Lifetime ISAs, not S&S ISAs. LISAs (either cash or S&S variants) cannot be flexible due to the additional restrictions placed upon them related to earning a bonus on contributions.

ISA declaration and HMRC rules appear to be two different things.
With a  S&S ISA, only cash held within it can be flexible, as in my link

Of course only cash can be flexibly withdrawn from a flexible S&S ISA, quoting the link: "(including from the sale of investments)". You cannot temporarily transfer lines of stock to an external trading account or withdraw share certificates and I do not think the MSE article suggests that. You need to sell the investments first and then flexibly withdraw and replace the cash. All subscriptions, including replacement subscriptions to all types of ISA must be made in cash. There are only very limited circumstances in which an investment can be transferred directly into an ISA.

Where the article is flawed is in the example it gives that "you are allowed to withdraw from a flexible cash ISA and replace it in a flexible stocks and shares ISA or flexible innovate finance ISA", which is quite right, but you can also withdraw from a flexible cash ISA and replace in a non-flexible S&S or IF ISA, or withdraw from a flexible S&S ISA and replace in a non-flexible cash ISA.

The ISA declaration is a different thing than HMRC rules. The ISA declaration is specified in the HMRC rules and involves the ISA subscriber making a statement that may be committing the dishonesty offence of fraud if made falsely. Whereas HMRC's rules govern its own actions and particularly those of ISA managers and are drawn from the body of legislation entitled the Individual Savings Account Regulations (of various parts and years). Both would indirectly impact the subscriber through different mechanisms. So, in the example of the subscription limit, the subscriber must declare that they will not exceed the subscription limit, whereas HMRC requires ISA Managers ensure "where the investor subscribes to any combination of cash ISA, stocks and shares ISA, innovative finance ISA, and Lifetime ISA with them, the amount subscribed does not exceed the overall subscription limit". Which is currently technically infeasible where more than one ISA manager is involved, but this may not always be the case. But it is categorically true that if you hold all types of ISA with the same provider, you will not be allowed to exceed £20k of current year subscriptions at any time.
Both are driving at the same outcome in different ways.

refluxer

surreysaver said:

refluxer said:

surreysaver said:

I wonder how this would work with flexible ISAs. I've currently got £20k sitting in a flexible cash ISA that I've put in this year, as well as subscribing to a S&S ISA. As long as I take out of my cash ISA an equivalent amount that I've paid into my S&S ISA before the end of the tax year, this is acceptable.
What will stop people paying into multiple flexible ISAs during the course of the year, but then withdrawing from them before 5th April?

I'm wondering if I've misunderstood ? Anyone who pays more than £20k of new subscriptions in total into any combination of ISAs of any type in the same tax year will have broken the £20k ISA limit rule and therefore made a false statement on any cash ISA declarations, regardless of the state of play at the end of the tax year or whether that's now or during the next tax year (after the rule changes).

"I declare that I have not subscribed/made a payment to and will not subscribe/make a payment more than the overall subscription limit in total to any combination of permitted ISA types in the same tax year"

You have misunderstood. Here's the thread started by myself earlier this year
https://forums.moneysavingexpert.com/discussion/6438967/flexible-cash-isa-plus-stocks-shares-isa

Having read through that thread and the responses above in this one, it doesn't look like I have misunderstood so my previous comments still stand - if at any point during the tax year you've paid more than £20k of new subscriptions into ISAs of any type (flexible or otherwise) and in any combination, then you've broken ISA rules and rendered the promise you made in your cash ISA declaration (that you hadn't already exceeded the £20k limit and wouldn't do so in the future) to be a false/fraudulent one, as @masonic mentioned.

While you might get away with a temporary balance of more than £20k of new subscriptions in a S&S and flexible cash ISA due to the way ISA reporting is managed by providers and HMRC, calling it acceptable is pushing it, somewhat.

As the ISA limit is remaining at £20k for the next tax year, then this situation won't change when the other changes come into effect.

Reed_Richards

I don't visit this board very often over the year, but every time I do there seems to be one thread or another about how you could disobey (or possibly disobey) the ISA rules but still get away with it.  

surreysaver

Reed_Richards said:

I don't visit this board very often over the year, but every time I do there seems to be one thread or another about how you could disobey (or possibly disobey) the ISA rules but still get away with it.  

But its not disobeying the rules. The rules do not say that money removed from a flexible ISA cannot be placed into another ISA; on the contrary, the rules say you are able to do that.
Regardless of what the spirit of the rules are, that is irrelevant if the rules do not explicitly state that

The_Green_Hornet

Until the Government amends the existing legislation to cater for the proposed changes indicated in the Autumn Statement no one knows what the new ISA rules will be.

I suggest anyone interested keep an eye out for revisions to The Individual Savings Account Regulations 1998.

eskbanker

surreysaver said:

Reed_Richards said:

I don't visit this board very often over the year, but every time I do there seems to be one thread or another about how you could disobey (or possibly disobey) the ISA rules but still get away with it.  

But its not disobeying the rules. The rules do not say that money removed from a flexible ISA cannot be placed into another ISA; on the contrary, the rules say you are able to do that.
Regardless of what the spirit of the rules are, that is irrelevant if the rules do not explicitly state that

Nobody is disputing that the rules allow money to be removed from a flexible ISA and added to a different ISA!

The separate matter being discussed is whether it's OK to have an aggregate total of more than £20K of current year money in ISAs at any time....

surreysaver

eskbanker said:

surreysaver said:

Reed_Richards said:

I don't visit this board very often over the year, but every time I do there seems to be one thread or another about how you could disobey (or possibly disobey) the ISA rules but still get away with it.  

But its not disobeying the rules. The rules do not say that money removed from a flexible ISA cannot be placed into another ISA; on the contrary, the rules say you are able to do that.
Regardless of what the spirit of the rules are, that is irrelevant if the rules do not explicitly state that

Nobody is disputing that the rules allow money to be removed from a flexible ISA and added to a different ISA!

The separate matter being discussed is whether it's OK to have an aggregate total of more than £20K of current year money in ISAs at any time....

Well, I think all I can say is the rules are not clear, or even fail to mention it

eskbanker

surreysaver said:

eskbanker said:

surreysaver said:

Reed_Richards said:

I don't visit this board very often over the year, but every time I do there seems to be one thread or another about how you could disobey (or possibly disobey) the ISA rules but still get away with it.  

But its not disobeying the rules. The rules do not say that money removed from a flexible ISA cannot be placed into another ISA; on the contrary, the rules say you are able to do that.
Regardless of what the spirit of the rules are, that is irrelevant if the rules do not explicitly state that

Nobody is disputing that the rules allow money to be removed from a flexible ISA and added to a different ISA!

The separate matter being discussed is whether it's OK to have an aggregate total of more than £20K of current year money in ISAs at any time....

Well, I think all I can say is the rules are not clear, or even fail to mention it

Are you planning to address the cogent counter-arguments to that position expressed further up this page?

jimjames

refluxer said:

surreysaver said:

refluxer said:

surreysaver said:

I wonder how this would work with flexible ISAs. I've currently got £20k sitting in a flexible cash ISA that I've put in this year, as well as subscribing to a S&S ISA. As long as I take out of my cash ISA an equivalent amount that I've paid into my S&S ISA before the end of the tax year, this is acceptable.
What will stop people paying into multiple flexible ISAs during the course of the year, but then withdrawing from them before 5th April?

I'm wondering if I've misunderstood ? Anyone who pays more than £20k of new subscriptions in total into any combination of ISAs of any type in the same tax year will have broken the £20k ISA limit rule and therefore made a false statement on any cash ISA declarations, regardless of the state of play at the end of the tax year or whether that's now or during the next tax year (after the rule changes).

"I declare that I have not subscribed/made a payment to and will not subscribe/make a payment more than the overall subscription limit in total to any combination of permitted ISA types in the same tax year"

You have misunderstood. Here's the thread started by myself earlier this year
https://forums.moneysavingexpert.com/discussion/6438967/flexible-cash-isa-plus-stocks-shares-isa

 if at any point during the tax year you've paid more than £20k of new subscriptions into ISAs of any type (flexible or otherwise

The point is that with flexible ISAs that's no longer quite true. If you pay in £20k, draw out £15k, pay back £10k then you've paid in a total of £30k new subscriptions into ISAs during that year which is entirely within the rules.

eskbanker

jimjames said:

refluxer said:

surreysaver said:

refluxer said:

surreysaver said:

I wonder how this would work with flexible ISAs. I've currently got £20k sitting in a flexible cash ISA that I've put in this year, as well as subscribing to a S&S ISA. As long as I take out of my cash ISA an equivalent amount that I've paid into my S&S ISA before the end of the tax year, this is acceptable.
What will stop people paying into multiple flexible ISAs during the course of the year, but then withdrawing from them before 5th April?

I'm wondering if I've misunderstood ? Anyone who pays more than £20k of new subscriptions in total into any combination of ISAs of any type in the same tax year will have broken the £20k ISA limit rule and therefore made a false statement on any cash ISA declarations, regardless of the state of play at the end of the tax year or whether that's now or during the next tax year (after the rule changes).

"I declare that I have not subscribed/made a payment to and will not subscribe/make a payment more than the overall subscription limit in total to any combination of permitted ISA types in the same tax year"

You have misunderstood. Here's the thread started by myself earlier this year
https://forums.moneysavingexpert.com/discussion/6438967/flexible-cash-isa-plus-stocks-shares-isa

 if at any point during the tax year you've paid more than £20k of new subscriptions into ISAs of any type (flexible or otherwise

The point is that with flexible ISAs that's no longer quite true. If you pay in £20k, draw out £15k, pay back £10k then you've paid in a total of £30k new subscriptions into ISAs during that year which is entirely within the rules.

But flexible ISAs have to entail the principle of net contributions, so in that scenario the £15K withdrawal is deducted from the original contribution, leaving a net contribution of £5K (and hence a remaining allowance of £15K will be shown by the provider at this point), and the £10K is then effectively bringing the net total to £15K.

That sequence of events is fine, but if the £20K and the £15K are paid in before any flexible withdrawals, then the net contribution exceeds £20K for a time, which is where the non-compliance arises.

Edit: this issue of sequencing came up in the other thread linked above, in which @surreysaver initially seemed to start from the same position as above (exceeding £20K is OK as long as it's no more than £20K by year end) but then backtracked to accepting that "At no time was I going to have more than £20k subscribed at any one time":

https://forums.moneysavingexpert.com/discussion/comment/79985243/#Comment_79985243