Flexible cash ISA

where_are_we

At the moment I am using my Zopa Cash Flexible ISA @5.08% as my easy access account instead of Santander Easy Access Saver now @4.2%. I used £11,500 of my £20,00 ISA allowance on a Virgin 5.25% 1 Year Fixed Cash ISA so I have £8500 annual ISA allowance left.

Is it correct that I can keep adding and withdrawing to my Zopa ISA as long as I don`t breach the £8500 capital balance? Even though I may well add £20k to £25k in total to this ISA over this tax year, though continually withdrawing at the same time.

eskbanker

Yes, you can repeatedly withdraw and redeposit to/from a flexible ISA, as long as the overall position from netting these off across the tax year keeps you within your total annual allowance.

where_are_we

Trying to keep under the £1000 personal savings allowance, whilst having numerous Regular Savers requires this sort of approach.

RG2015

eskbanker said:

Yes, you can repeatedly withdraw and redeposit to/from a flexible ISA, as long as the overall position from netting these off across the tax year keeps you within your total annual allowance.

This is correct but Virgin Money appear to have an issue that can affect a flexible ISA with frequent transactions.

This may not apply to Zopa or any other bank but there is an issue I had with Virgin Money last year. I was using my VM flexible ISA as an easy access hub and on one occasion had a deposit rejected.

It appears that VM add up all the deposits on a single day whilst ignoring any withdrawals to test if their ISA limit has been breached. This happened despite my rejected deposit being made after a larger withdrawal so my ISA limit was never exceeded.

masonic

RG2015 said:

It appears that VM add up all the deposits on a single day whilst ignoring any withdrawals to test if their ISA limit has been breached. This happened despite my rejected deposit being made after a larger withdrawal so my ISA limit was never exceeded.

So you needed to wait until the next day to make the replacement subscriptions?

RG2015

masonic said:

RG2015 said:

It appears that VM add up all the deposits on a single day whilst ignoring any withdrawals to test if their ISA limit has been breached. This happened despite my rejected deposit being made after a larger withdrawal so my ISA limit was never exceeded.

So you needed to wait until the next day to make the replacement subscriptions?

With hindsight I believe that would have worked.

However at the time VM staff made no mention of a daily issue and told me I was subscribing to a second ISA which was not allowed. This was not the case as I was merely replacing money in a flexible ISA.

I initially withdrew the entire balance but a few weeks later (but before 5th April) I replaced my full balance without any problem.

The daily issue is only conjecture but supported by another poster on a thread raised at the time.

https://forums.moneysavingexpert.com/discussion/6429395/flexible-cash-isa-rules/p1