Moving S&S ISA Same Year

Ste2341545

Hello, 

I have maxed out my ISA this year 50/50 between S&S ISA and Cash ISA. I am not so keen on the provider for my S&S ISA. Can I sell my S&S and move the money to another provider this year? 

Also, same question but for cash ISA if I find a better rate if that happens. 

eskbanker

Yes, if the existing ISAs are flexible then you can move the money via a non-ISA account, or otherwise you'd need to you use the new provider's ISA transfer process.

Edit: flexibility rules have apparently been changed last week!

gravel_2

why not transfer it?

eskbanker

gravel_2 said:

why not transfer it?

Not sure if that was in response to my post, but not all ISAs accept inward transfers, so moving funds from a flexible ISA without processing as a transfer potentially opens up better rates.

gravel_2

eskbanker said:

gravel_2 said:

why not transfer it?

Not sure if that was in response to my post, but not all ISAs accept inward transfers, so moving funds from a flexible ISA without processing as a transfer potentially opens up better rates.

I was sat on the page when it had no responses and didn't press post. I'd seen no replies at all. Ignore me.

friolento

eskbanker said:

Yes, if the existing ISAs are flexible then you can move the money via a non-ISA account, or otherwise you'd need to you use the new provider's ISA transfer process.

within the ISA rules, the money can only be moved to another ISA with an ISA transfer. If OP withdraws the money, the subscription still stays with the original ISA. "Flexible" would only come into it if OP wanted to re-deposit some or all of the withdrawn money into the same original ISA, within the current tax year

eskbanker

friolento said:

eskbanker said:

Yes, if the existing ISAs are flexible then you can move the money via a non-ISA account, or otherwise you'd need to you use the new provider's ISA transfer process.

within the ISA rules, the money can only be moved to another ISA with an ISA transfer. If OP withdraws the money, the subscription still stays with the original ISA. "Flexible" would only come into it if OP wanted to re-deposit some or all of the withdrawn money into the same original ISA, within the current tax year

Interesting, the position since their introduction has been that current year money can be withdrawn from a flexible ISA and redeposited into any other ISA, but yes, the published guidance was seemingly updated last week:

30 April 2024

The 'flexible ISAs' section has been updated to clarify that, when replacing ISA funds from the current or previous tax year, they must be put back into the account they were withdrawn from.

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

New wording:

Replacement of flexible ISA funds from the previous year, current year or both must be made:

• to the account from which the withdrawal was made
• in the same tax year

Old wording:

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

[...]

Replacement of flexible ISA previous year funds must be made to the account from which the withdrawal was made, and in the same tax year.

masonic

eskbanker said:

Interesting, the position since their introduction has been that current year money can be withdrawn from a flexible ISA and redeposited into any other ISA, but yes, the published guidance was seemingly updated last week:

30 April 2024

The 'flexible ISAs' section has been updated to clarify that, when replacing ISA funds from the current or previous tax year, they must be put back into the account they were withdrawn from.

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

"Clarify"? It's a complete 180 from the long-established policy that current year subscriptions can be replaced in any valid ISA for the current tax year.

This is a change I don't think any flexible ISA provider currently supports. For this to be implemented in practice, a flexible withdrawal must not result in an increase to the available allowance reported by the ISA manager. Instead a separate flexibly withdrawn figure would be needed. Otherwise the investor would not be able to keep track of how much of their ISA allowance they have actually used vs flexibly withdrawn.

jimjames

masonic said:

eskbanker said:

Interesting, the position since their introduction has been that current year money can be withdrawn from a flexible ISA and redeposited into any other ISA, but yes, the published guidance was seemingly updated last week:

30 April 2024

The 'flexible ISAs' section has been updated to clarify that, when replacing ISA funds from the current or previous tax year, they must be put back into the account they were withdrawn from.

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

"Clarify"? It's a complete 180 from the long-established policy that current year subscriptions can be replaced in any valid ISA for the current tax year.

This is a change I don't think any flexible ISA provider currently supports. For this to be implemented in practice, a flexible withdrawal must not result in an increase to the available allowance reported by the ISA manager. Instead a separate flexibly withdrawn figure would be needed. Otherwise the investor would not be able to keep track of how much of their ISA allowance they have actually used vs flexibly withdrawn.

I wonder if it's a mistake and some old wording got copied in error. I'm already using the current flexibility to pay into S&S ISA and reduce cash ISA balance month by month so this wouldn't be possible if the rules have changed.

masonic

jimjames said:

masonic said:

eskbanker said:

Interesting, the position since their introduction has been that current year money can be withdrawn from a flexible ISA and redeposited into any other ISA, but yes, the published guidance was seemingly updated last week:

30 April 2024

The 'flexible ISAs' section has been updated to clarify that, when replacing ISA funds from the current or previous tax year, they must be put back into the account they were withdrawn from.

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

"Clarify"? It's a complete 180 from the long-established policy that current year subscriptions can be replaced in any valid ISA for the current tax year.

This is a change I don't think any flexible ISA provider currently supports. For this to be implemented in practice, a flexible withdrawal must not result in an increase to the available allowance reported by the ISA manager. Instead a separate flexibly withdrawn figure would be needed. Otherwise the investor would not be able to keep track of how much of their ISA allowance they have actually used vs flexibly withdrawn.

I wonder if it's a mistake and some old wording got copied in error. I'm already using the current flexibility to pay into S&S ISA and reduce cash ISA balance month by month so this wouldn't be possible if the rules have changed.

They've explicitly detailed the change in the updates section, so I don't think it could be unintentional. But it wasn't mentioned in the last tax free savings bulletin, so they really do seem to have made it out of the blue. I'm sure you won't be alone in already having made use of the previous guidance. We shall see if the reporting requirements get changed over the course of this tax year, but currently it is on the basis of net subscriptions for flexible ISAs. To enforce this, that would need to be changed to a high water mark.

friolento

OK, seems I got this wrong, too..... MSE says:

You must replace the money in the same ISA

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. 

Clear as mud.