Easy access ISAs

mjstephens2001

Hi,
Earlier this tax year I put ~£19k in an easy access ISA. Later I withdrew most of it to leave ~£2.5k (I had a large purchase I needed the cash for).
Last week I opened a fixed rate ISA and put in ~£8.5k.

Does this mean that:
a) I am over-subscribed as I have put ~£27.5k in ISAs this year,
b) I am fine as I have put ~£11.5k in ISAs this year.

If a) is true, do I need to contact the second provider?

Also what happens if I were to transfer (via proper ISA transfer) the easy access ISA to the fixed rate ISA? I would have ~£11.5k in the ISA - would I still be able to use the remaining ~£8.5 allowance, or have I effectively lost that because I'm transferring across a ~£19k pot, which happens to only have ~£2.5k in it?

TIA

Ayr_Rage

a) Yes, you have broken the rules and oversubscribed by £7,500

b) No

You can only put £20,000 of "new" money in per tax year.

If the easy access ISA was "flexible" then you could have replaced the withdrawn funds there.

I'll leave the solution to those who have better knowledge of what to do next.

 

Albermarle

I think you need to contact the second provider and unwind what you have done.

Brunokid

Ayr_Rage said:

a) Yes, you have broken the rules and oversubscribed by £7,500

b) No

You can only put £20,000 of "new" money in per tax year.

If the easy access ISA was "flexible" then you could have replaced the withdrawn funds there.

I'll leave the solution to those who have better knowledge of what to do next.

 

This is incorrect information.

You can withdraw as much as you want, as long as you replace it within the same tax year.

I withdrew over 100K on April 25th this year. I intend to put it back in, in November together with this years 20K

slinger2

Brunokid said:

Ayr_Rage said:

a) Yes, you have broken the rules and oversubscribed by £7,500

b) No

You can only put £20,000 of "new" money in per tax year.

If the easy access ISA was "flexible" then you could have replaced the withdrawn funds there.

I'll leave the solution to those who have better knowledge of what to do next.

 

This is incorrect information.

You can withdraw as much as you want, as long as you replace it within the same tax year.

I withdrew over 100K on April 25th this year. I intend to put it back in, in November together with this years 20K

What you say would work for "old" money but the OP clearly says "Earlier this tax year I put ~£19k in an easy access ISA ...", ie the £19k was "new" money and counts towards this year's £20k allowance.

Ayr_Rage

Brunokid said:

Ayr_Rage said:

a) Yes, you have broken the rules and oversubscribed by £7,500

b) No

You can only put £20,000 of "new" money in per tax year.

If the easy access ISA was "flexible" then you could have replaced the withdrawn funds there.

I'll leave the solution to those who have better knowledge of what to do next.

 

This is incorrect information.

You can withdraw as much as you want, as long as you replace it within the same tax year.

I withdrew over 100K on April 25th this year. I intend to put it back in, in November together with this years 20K

@brunokid please re-read the OP, all the money is this year's allowance and they have exceeded it by £7,500.

flaneurs_lobster

Albermarle said:

I think you need to contact the second provider and unwind what you have done.

This. Most providers have a "cooling-off" period (generally 14 days) where you can simply cancel the contract and get your money returned without penalty (or interest). Leave it longer and you will have the early redemption penalty to pay which will probably leave you with less than you paid in and you will still have broken HMRC's rules.

Imvrasos

If the ISA was flexible and assuming you did not fund another after 5 April, you could still pay in 9k.

But you mention a fixed ISA therefore unfortunately you have breached the 20k limit, contact the provider to offer repair advice.

slinger2

Imvrasos said:

If the ISA is flexible and assuming you did not fund another after 5 April, you can still pay in 9k.

If the ISA is inflexible you have breached the 20k limit, contact the provider to offer repair advice.

It may be just me, but I find the above replies quite convoluted and confusing, to what appears to be a straightforward question.

This is incorrect. From April 2024 money withdrawn from a flexible ISA can only be returned to the same ISA, otherwise that part of the ISA allowance is lost. He used up £19k with the easy access account, so another £8.5 took him over the £20k limit. He's over the limit even if the easy access account is flexible.

Ayr_Rage

slinger2 said:

Imvrasos said:

If the ISA is flexible and assuming you did not fund another after 5 April, you can still pay in 9k.

If the ISA is inflexible you have breached the 20k limit, contact the provider to offer repair advice.

It may be just me, but I find the above replies quite convoluted and confusing, to what appears to be a straightforward question.

This is incorrect. From April 2024 money withdrawn from a flexible ISA can only be returned to the same ISA, otherwise that part of the ISA allowance is lost. He used up £19k with the easy access account, so another £8.5 took him over the £20k limit. He's over the limit even if the easy access account is flexible.

@Brunokid I hope you are still following this and have now realised how it all works since the changes regarding Flexible ISAs this April.

slinger2

For those who want the gory details see: https://www.legislation.gov.uk/uksi/1998/1870/regulation/5DDB especially F5 and F6. The very useful para (2) has now gone and para (3) now reads "Any replacement subscription may be made only to the account from which the withdrawal of a cash amount it is replacing was made."

(I take no credit for finding any of this, search MSE for regulation 5DDB to find those who did)