withdrawing some £ from a flexible cash ISA to put it in a flexible stocks and shares ISA

moi

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

The key rule is you must replace the money in the same ISA account you took it out from, though 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. 

I have a new Chip flexible cash ISA and a Vanguard S&S flexible ISA (from past years.)

Going by the above advice, I thought I could put £20K into Chip now, then at some time during the next tax year I could move some of that £20K into my Vanguard S&S (move by myself, not a formal ISA transfer.) I'm aware that part-transfers of the year's subscription are now possible.

I wanted to check that idea with Vanguard, and they said moving between Cash & S&S ISAs is only possible with the same provider.

So... I wondered if I've misunderstood the MSE guide because that phrase doesn't say anything about the same provider. Alternatively, I've seen on here that some ISA providers haven't updated their terms/opening accounts with the new 2024 rules, so I wondered if Vanguard haven't updated the info they give out. 

Does anyone know? 😕

jimjames

HMRC rules say you can do exactly what you propose. There is no requirement to pay money back into the same ISA for current year money. You do have to pay it back into the same ISA for previous year's money. If it wasn't allowed then they wouldn't make the distinction between current and previous years.

https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors

Key wording:

Withdrawals of current year subscriptions, can effectively be replaced in any current year ISA.

slinger2

jimjames said:

HMRS rules say you can do exactly what you propose. There is no requirement to pay money back into the same ISA for current year money. You do have to pay it back into the same ISA for previous year's money. If it wasn't allowed then they wouldn't make the distinction between current and previous years.

https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors

Key wording:

Withdrawals of current year subscriptions, can effectively be replaced in any current year ISA.

I hadn't realised that.

So if I put £5k in a flexi ISA and then withdraw £4k (same tax year) and don't replace it, the provider reports that I've used £1k of my allowance and I've got £19k left. However if I put £5k in a non-flexi ISA and then withdraw £4k (same tax year) that provider reports that I've used £5k of my allowance and I've only got £15k left. Or am I misunderstand it?

eskbanker

slinger2 said:

jimjames said:

HMRS rules say you can do exactly what you propose. There is no requirement to pay money back into the same ISA for current year money. You do have to pay it back into the same ISA for previous year's money. If it wasn't allowed then they wouldn't make the distinction between current and previous years.

https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors

Key wording:

Withdrawals of current year subscriptions, can effectively be replaced in any current year ISA.

I hadn't realised that.

So if I put £5k in a flexi ISA and then withdraw £4k (same tax year) and don't replace it, the provider reports that I've used £1k of my allowance and I've got £19k left. However if I put £5k in a non-flexi ISA and then withdraw £4k (same tax year) that provider reports that I've used £5k of my allowance and I've only got £15k left. Or am I misunderstand it?

Essentially, yes, that's right, but it may depend on exactly what you mean by 'the provider reports' - ISA providers report annual figures to HMRC, after the end of each tax year, so by then any unused allowance is irrelevant.  However, during the year, your remaining allowance will generally be displayed to the saver/investor within online banking/app, etc....

LL_USS

EDIT - question now posted in a new thread to avoid confusion with the old rule in this thread. 

@eskbanker May I ask you this question please (thank you for having answered to some of my saving questions elsewhere). I am opening a three years fixed Shawbrook bank ISA and was about to withdraw money out from Trading 212 to put what I can into the new Shawbrook account without having to close Traing 212 so I can still keep using it.

I have only realised now that "you have to replace the money you take out of a flexible ISA in the same tax year". THis means if I have at once point reached a total deposit of 16K into Trading 212 even though I kept on putting in, taking out etc., I cannot take (meaning withdraw) 15K out of Trading 212 to put in a new account right? Because in Trading 212's eye I still have used 15K allowance of this year, and thus I cannot use another 15K allowance to deposit into Shawbrook. The only way to move that to Shawbrook is to transfer Trading 212 in or just keep 15K in Trading 212?

eskbanker

LL_USS said:

@eskbanker May I ask you this question please (thank you for having answered to some of my saving questions elsewhere). I am opening a three years fixed Shawbrook bank ISA and was about to withdraw money out from Trading 212 to put what I can into the new Shawbrook account without having to close Traing 212 so I can still keep using it.

I have only realised now that "you have to replace the money you take out of a flexible ISA in the same tax year". THis means if I have at once point reached a total deposit of 16K into Trading 212 even though I kept on putting in, taking out etc., I cannot take (meaning withdraw) 15K out of Trading 212 to put in a new account right? Because in Trading 212's eye I still have used 15K allowance of this year, and thus I cannot use another 15K allowance to deposit into Shawbrook. The only way to move that to Shawbrook is to transfer Trading 212 in or just keep 15K in Trading 212?

I'd suggest posting that in another thread, as this one discusses the old rules about flexible ISAs and is now out of date, so it could cause confusion.

LL_USS

eskbanker said:

I'd suggest posting that in another thread, as this one discusses the old rules about flexible ISAs and is now out of date, so it could cause confusion.

Yes sure - i've done that, thank you