Flexible cash ISAs

purplefudge13

I had a flexible cash ISA with Trading 212 that paid 5.17% interest and is now going down to 4.9%. Plum is offering 5.18% interest cash ISAs BUT the rate is much lower if it’s an ISA transfer. Am I correct in understanding that, because the trading 212 ISA is flexible, I would withdraw all the money in that ISA to a current account and then open the plum ISA ‘from scratch’ with that money from the current account?
Am I missing something?

Ayr_Rage

When did you fund the T212 ISA?

If you have used this year's allowance then you cannot withdraw it and subscribe to another cash ISA until the next tax year.

where_are_we

If you withdraw to a current account you will lose the "ISA" status for that sum of money. You are not allowed to exceed your £20k annual ISA allowance, so by putting this money into another ISA you must not break this rule. Did you contribute your Trading 212 ISA money in this tax year?

For example if your Trading 212 ISA contribution was this tax year and you have not contributed to any other ISA this tax year and your contribution was £10K or less then you would be able to move that money to your current account and then on to Plum and not incur the lower interest rate penalty. Do you intend to add more money to this or any other ISA this tax year? Remember to include the Trading 212 money as well as the Plum money when calculating how much more you have left to be able to contribute this tax year.

The Plum ISA is not flexible and allows only 3 penalty free withdrawals while Trading 212 is flexible. Trading 212 cash ISA interest rate has been very competitive in the past so I`m not sure Plum`s interest rate will remain above Trading 212 in the next year.

purplefudge13

@where_are_we @Ayr_Rage yes it was in this tax year I added to the trading 212 cash isa, but I read on the gov website - If your ISA is 'flexible', you can take out cash then put it back in during the same tax year without reducing your current year's allowance. Your provider can tell you if your ISA is flexible.

Ayr_Rage

purplefudge13 said:

@where_are_we @Ayr_Rage yes it was in this tax year I added to the trading 212 cash isa, but I read on the gov website - If your ISA is 'flexible', you can take out cash then put it back in during the same tax year without reducing your current year's allowance. Your provider can tell you if your ISA is flexible.

Yes, you can put it back into the SAME ISA from which you withdrew the funds, not another one.

The rules have changed.

surreysaver

Ayr_Rage said:

purplefudge13 said:

@where_are_we @Ayr_Rage yes it was in this tax year I added to the trading 212 cash isa, but I read on the gov website - If your ISA is 'flexible', you can take out cash then put it back in during the same tax year without reducing your current year's allowance. Your provider can tell you if your ISA is flexible.

Yes, you can put it back into the SAME ISA from which you withdrew the funds, not another one.

The rules have changed.

They shouldn't change the rules part way through a tax year. And different providers seem to be giving different information to the public what the rules are.
Think there will be plenty of people who have fallen foul of the rules this year. Will be interesting to see whether HMRC pick up on it and what they do about it.

masonic

surreysaver said:

And different providers seem to be giving different information to the public what the rules are.

This is nothing new.

eskbanker

surreysaver said:

Ayr_Rage said:

purplefudge13 said:

@where_are_we @Ayr_Rage yes it was in this tax year I added to the trading 212 cash isa, but I read on the gov website - If your ISA is 'flexible', you can take out cash then put it back in during the same tax year without reducing your current year's allowance. Your provider can tell you if your ISA is flexible.

Yes, you can put it back into the SAME ISA from which you withdrew the funds, not another one.

The rules have changed.

They shouldn't change the rules part way through a tax year. And different providers seem to be giving different information to the public what the rules are.

Many/most will share your opinion about changing rules during the year, but they unquestionably have done that, so everyone is now subject to the current version, even if replacement subscriptions earlier in the tax year to other providers would no longer be compliant if done now.

While there were plenty of rule changes applicable from the start of the tax year, some of which haven't been implemented by all providers, are you aware of any ISA providers giving misleading guidance about replacing flexibly withdrawn money?

masonic

eskbanker said:

While there were plenty of rule changes applicable from the start of the tax year, some of which haven't been implemented by all providers, are you aware of any ISA providers giving misleading guidance about replacing flexibly withdrawn money?

Here's a recent example:

https://forums.moneysavingexpert.com/discussion/comment/80933267/#Comment_80933267

eskbanker

masonic said:

eskbanker said:

While there were plenty of rule changes applicable from the start of the tax year, some of which haven't been implemented by all providers, are you aware of any ISA providers giving misleading guidance about replacing flexibly withdrawn money?

Here's a recent example:

https://forums.moneysavingexpert.com/discussion/comment/80933267/#Comment_80933267

Fair enough, although I was really meaning publishing misleading guidance, i.e. material that's been reviewed, rather than ad hoc remarks from customer service advisers, who have never been the most reliable of sources!  But yes, clearly wrong as you said at the time, albeit that was four months ago, so maybe they've caught up with the change now....

AmityNeon

As long as the £20,000 limit is never breached at any point in the year, I don't see HMRC making more work for themselves by kicking up a fuss just because funds withdrawn from one flexible ISA weren't replaced in the same ISA. It's unnecessary administration for all parties involved and currently an utter mess from its introduction to the inconsistent application across different providers, so I'm just going to ignore the rules this tax year, make false ISA declarations if necessary and see how I'm punished later.