Flexible cash isa +S&S Isa

buyhighselllow

I deposit £250/ month into a S&S isa. 
Can I open a flexible cash ISA with 20K and reduce my cash ISA  holding by £250 each month so by month 12 I have 17K in the cash ISA and will have invested 3K into the S&S  ?

Similarly, If I decide to invest more one month into the S&S can I just offset but reducing my cash isa by the extra invested in the S&S

Ayr_Rage

The most you can contribute in a tax year is £20,000 in total.

If you open a flexible cash ISA you can only put in £20000 MINUS what (if any) you have already contributed to the S & S ISA. 

slinger2

I think that if you withdrew the £250 from the flexi ISA (thereby reducing your "net" contribution by £250) and then paid that into the S&S you'd be ok.

friolento

slinger2 said:

I think that if you withdrew the £250 from the flexi ISA (thereby reducing your "net" contribution by £250) and then paid that into the S&S you'd be ok.

I am afraid, this is not how it works. You cannot reduce your contributions once made.

You can temporarily withdraw money from a flexible ISA but this does not reduce your contributions made. The only legal way to return the withdrawn funds to an ISA is to re-deposit them into the exact same ISA the funds were withdrawn from.

OP could in theory request an ISA transfer into their S&S ISA from their cash ISA each month. This would pre-req that the cash ISA supports partial ISA transfer and that the S&S ISA provider is happy to process such small, repeat transfers. It would obviously also require the OP to submit and monitor monthly ISA transfer requests. TBH, I can’t see a compelling case for such a complicated construct.

masonic

It is absolutely within the rules to make replacement subscriptions withdrawn from a current year flexible ISA into any other ISA, so starting with £20k in a flexible cash ISA and an empty S&S ISA, then each month withdrawing £250 to pay into a S&S ISA is fine. What is not permitted is to exceed the overall allowance at any time.

slinger2

Surely masonic is right. For a flexible ISA:

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

There's no requirement for the current year's money to go back where it came from.

RetSol

slinger2 said:

Surely masonic is right. For a flexible ISA:

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

There's no requirement for the current year's money to go back where it came from.

And now, presumably, money withdrawn from a flexible ISA can be paid back into multiple ISAs. 

jimjames

friolento said:

slinger2 said:

I think that if you withdrew the £250 from the flexi ISA (thereby reducing your "net" contribution by £250) and then paid that into the S&S you'd be ok.

I am afraid, this is not how it works. You cannot reduce your contributions once made.

This is not correct. With the new flexible ISA rules it is exactly how it works so what is proposed is perfectly possible and legitimate as long as the total remains at or under £20k for total balance this year. There is no requirement to pay money back into the same ISA it was taken from for CURRENT year subscriptions.

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

masonic

slinger2 said:

Surely masonic is right. For a flexible ISA:

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

There's no requirement for the current year's money to go back where it came from.

I'm not right any more as HMRC has changed it's guidance and as of 30th April states any flexibly withdrawn subscriptions must be replaced in the same ISA it was taken from.