Interest on Flexible ISAs during the year?

Bjn201_2

How does interest earnt in a flexible ISA work if you withdraw it? I.e. you would end up with more than 20k due to interest earnt, but if you withdrew it can you put the interesrt back in? 

Ayr_Rage

No.

You can only legally subscribe a total of £20,000 in each tax year.

Have you ever signed an ISA declaration ?

Bjn201_2

Got it. I didn't realise it was so black and white. Absolutely not possible then.

slinger2

"Flexible ISA withdrawals are deemed to be firstly of current year subscriptions, and secondly of previous year funds. Replacements are deemed to be firstly of previous year funds, and secondly of current year subscriptions."

The assumption here is that if you took out all this year's subscription, all the previous years funds, and then some interest you got during the current tax year then you'd not be permitted to put that interest back in (at least only by using some unused allowance)

surreysaver

Ayr_Rage said:

No.

You can only legally subscribe a total of £20,000 in each tax year.

Have you ever signed an ISA declaration ?

Interest earned in an ISA doesn't count as part of the subscriptions 

A lot of ISA declarations haven't been updated to comply with the new rules

surreysaver

Bjn201_2 said:

Got it. I didn't realise it was so black and white. Absolutely not possible then.

It isn't so black and white. Interest earned in previous tax years is obviously previous years monies.
Interest earned this year isn't part of this year's subscriptions. Nor is it part of last year's money. 
Without looking, I suspect you'd be able to take the money out and pay it back in (as long as its the same account). Whether the organisation's systems would be confused by that or not I don't know

https://www.google.co.uk/url?sa=t&source=web&rct=j&opi=89978449&url=https://assets.publishing.service.gov.uk/media/5a958128e5274a5b849d3b74/worked_examples_of_flexible_ISAs.pdf&ved=2ahUKEwj7gKuB-r-FAxXsXEEAHQIDCwoQFnoECC8QAQ&usg=AOvVaw23iKn40bmPcyfQnLL522Nc

Ayr_Rage

@surreysaver as the op edited their post my reply may seem a bit confusing as I didn't quote them, I wish people wouldn't edit originals!

My "no" was to their original now removed question.

Irrespective of Ts and Cs not being updated you can still only subscribe a total of £20,000 of new money in a tax year.

slinger2

surreysaver said:

Bjn201_2 said:

Got it. I didn't realise it was so black and white. Absolutely not possible then.

It isn't so black and white. Interest earned in previous tax years is obviously previous years monies.
Interest earned this year isn't part of this year's subscriptions. Nor is it part of last year's money. 
Without looking, I suspect you'd be able to take the money out and pay it back in (as long as its the same account). Whether the organisation's systems would be confused by that or not I don't know

https://www.google.co.uk/url?sa=t&source=web&rct=j&opi=89978449&url=https://assets.publishing.service.gov.uk/media/5a958128e5274a5b849d3b74/worked_examples_of_flexible_ISAs.pdf&ved=2ahUKEwj7gKuB-r-FAxXsXEEAHQIDCwoQFnoECC8QAQ&usg=AOvVaw23iKn40bmPcyfQnLL522Nc

Seems my assumption was wrong. In any case you can't increase your allowance by withdrawing the interest, Your net subscriptions after the withdrawals are £nil, not -£200.

csw5780

slinger2 said:

surreysaver said:

Bjn201_2 said:

Got it. I didn't realise it was so black and white. Absolutely not possible then.

It isn't so black and white. Interest earned in previous tax years is obviously previous years monies.
Interest earned this year isn't part of this year's subscriptions. Nor is it part of last year's money. 
Without looking, I suspect you'd be able to take the money out and pay it back in (as long as its the same account). Whether the organisation's systems would be confused by that or not I don't know

https://www.google.co.uk/url?sa=t&source=web&rct=j&opi=89978449&url=https://assets.publishing.service.gov.uk/media/5a958128e5274a5b849d3b74/worked_examples_of_flexible_ISAs.pdf&ved=2ahUKEwj7gKuB-r-FAxXsXEEAHQIDCwoQFnoECC8QAQ&usg=AOvVaw23iKn40bmPcyfQnLL522Nc

Seems my assumption was wrong. In any case you can't increase your allowance by withdrawing the interest, Your net subscriptions after the withdrawals are £nil, not -£200.

In the example quoted surely the £200 can be returned to the originating account ONLY. However the example implies that the remaining current year £20k allowance could be payed into any other ISA, cash or otherwise including the originating account. 

slinger2

csw5780 said:

slinger2 said:

surreysaver said:

Bjn201_2 said:

Got it. I didn't realise it was so black and white. Absolutely not possible then.

It isn't so black and white. Interest earned in previous tax years is obviously previous years monies.
Interest earned this year isn't part of this year's subscriptions. Nor is it part of last year's money. 
Without looking, I suspect you'd be able to take the money out and pay it back in (as long as its the same account). Whether the organisation's systems would be confused by that or not I don't know

https://www.google.co.uk/url?sa=t&source=web&rct=j&opi=89978449&url=https://assets.publishing.service.gov.uk/media/5a958128e5274a5b849d3b74/worked_examples_of_flexible_ISAs.pdf&ved=2ahUKEwj7gKuB-r-FAxXsXEEAHQIDCwoQFnoECC8QAQ&usg=AOvVaw23iKn40bmPcyfQnLL522Nc

Seems my assumption was wrong. In any case you can't increase your allowance by withdrawing the interest, Your net subscriptions after the withdrawals are £nil, not -£200.

In the example quoted surely the £200 can be returned to the originating account ONLY. However the example implies that the remaining current year £20k allowance could be payed into any other ISA, cash or otherwise including the originating account. 

That's right. Your net subscriptions after the withdrawals are £nil, so you've got £20k left to use as you like. The £200 seems to be treated like "old" money and has to go back to where it came from.

csw5780

slinger2 said:

csw5780 said:

slinger2 said:

surreysaver said:

Bjn201_2 said:

Got it. I didn't realise it was so black and white. Absolutely not possible then.

It isn't so black and white. Interest earned in previous tax years is obviously previous years monies.
Interest earned this year isn't part of this year's subscriptions. Nor is it part of last year's money. 
Without looking, I suspect you'd be able to take the money out and pay it back in (as long as its the same account). Whether the organisation's systems would be confused by that or not I don't know

https://www.google.co.uk/url?sa=t&source=web&rct=j&opi=89978449&url=https://assets.publishing.service.gov.uk/media/5a958128e5274a5b849d3b74/worked_examples_of_flexible_ISAs.pdf&ved=2ahUKEwj7gKuB-r-FAxXsXEEAHQIDCwoQFnoECC8QAQ&usg=AOvVaw23iKn40bmPcyfQnLL522Nc

Seems my assumption was wrong. In any case you can't increase your allowance by withdrawing the interest, Your net subscriptions after the withdrawals are £nil, not -£200.

In the example quoted surely the £200 can be returned to the originating account ONLY. However the example implies that the remaining current year £20k allowance could be payed into any other ISA, cash or otherwise including the originating account. 

That's right. Your net subscriptions after the withdrawals are £nil, so you've got £20k left to use as you like. The £200 seems to be treated like "old" money and has to go back to where it came from.

So is it only necessary to TRANSFER funds held in an ISA between tax years? As if they are flexible, moving funds between them in the current tax year merely adjusts the £20k? ie the allowance is not lost on withdrawals outside the ISA if deposited to any ISA in the current tax year.