Flexible ISA / putting money back in after withdrawing?

a03b

Hello,

I have a question around Flexible ISA rules. I have an ISA from the 2022-23 tax year (this is the confusing bit). I withdrew money and I'm wondering if I can put it back now?

Details:
* Opened a Barclays Smart Investor ISA (Flexible) in December 2022
* Put in £20k and my investment grew to £28k
* Last month I withdrew entire £28k

Now can I put back the whole £28k? Does it have to be in one go? Or can I put it in £5k chunks (given they are all in this tax year)?

Thanks all

eskbanker

You can replace the whole £28K in as many chunks as you like, provided they're all completed by the end of the tax year on 5 April.

LHW99

eskbanker said:

You can replace the whole £28K in as many chunks as you like, provided they're all completed by the end of the tax year on 5 April.

The OP is talking about an ISA from the 2022-23 tax year though (and it is now 24-25). I had thought the flexibility related to money put in during a tax year, and replaced in the same tax year?

This seems to be implied by the MSE page (paragraph 2)

https://www.moneysavingexpert.com/savings/flexible-isas/

Roger175

No. You can only replenish the actual contributions (not the growth), up to the maximum of £20k in the current tax year.

If the ISA concerned was for the 22-23 tax year, you cannot now top it back up

george4064

Irrespective, depending how much of the current £20k ISA allowance OP has used. OP could deposit up to £20k back into an ISA wrapper this current tax year.

xylophone

https://www.moneysavingexpert.com/savings/flexible-isas/

Let's say you have £50,000 in flexible ISAs, but other savings accounts pay higher interest that you want to take advantage of, and you don't want to lose your ability to keep £50,000 tax-free year after year as you can in a cash ISA. Plus remember the personal savings allowance means you can earn up to £1,000 in interest in non-ISA savings accounts each financial year tax-free.

Here's how:

1. At the start of the new tax year – so from 6 April – withdraw the ISA cash.
2. Put it in (several) high interest accounts (see our Top savings guide for the best deals).
3. Before 5 April the following year just put it back in the ISA to keep your tax protection.
   
4. Repeat the process again and again.
   

This means your money would be earning more interest for most of the year, whilst still keeping the long-term benefits of an ISA.

surreysaver

LHW99 said:

eskbanker said:

You can replace the whole £28K in as many chunks as you like, provided they're all completed by the end of the tax year on 5 April.

The OP is talking about an ISA from the 2022-23 tax year though (and it is now 24-25). I had thought the flexibility related to money put in during a tax year, and replaced in the same tax year?

This seems to be implied by the MSE page (paragraph 2)

https://www.moneysavingexpert.com/savings/flexible-isas/

Wrong. As long as the money is replaced during the same tax year it is taken out, it doesn't matter which tax year the money was originally paid in 

eskbanker

surreysaver said:

LHW99 said:

eskbanker said:

You can replace the whole £28K in as many chunks as you like, provided they're all completed by the end of the tax year on 5 April.

The OP is talking about an ISA from the 2022-23 tax year though (and it is now 24-25). I had thought the flexibility related to money put in during a tax year, and replaced in the same tax year?

This seems to be implied by the MSE page (paragraph 2)

https://www.moneysavingexpert.com/savings/flexible-isas/

Wrong. As long as the money is replaced during the same tax year it is taken out, it doesn't matter which tax year the money was originally paid in 

Agreed - there's no need to be misinterpreting an MSE article when the official documentation is much clearer:

Flexible ISA withdrawals are deemed to be:

• firstly of current year subscriptions
• secondly of previous year funds

Replacement subscriptions are deemed to be:

• firstly of previous year funds
• secondly of current year subscriptions

Where subscriptions and withdrawals are processed on the same day, a net end of day position may be used where the manager’s system is unable to track the exact time of each transaction.

Managers do not need to establish or record whether a replacement subscription relates to current or previous year subscriptions (or any related income or growth).

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

surreysaver

Roger175 said:

No. You can only replenish the actual contributions (not the growth), up to the maximum of £20k in the current tax year.

If the ISA concerned was for the 22-23 tax year, you cannot now top it back up

Why can't you replenish the growth?

eskbanker

surreysaver said:

Roger175 said:

No. You can only replenish the actual contributions (not the growth), up to the maximum of £20k in the current tax year.

If the ISA concerned was for the 22-23 tax year, you cannot now top it back up

Why can't you replenish the growth?

Yes, as with the other misconception, the actual rules clarify that growth isn't treated any differently, in that anything withdrawn from a flexible ISA can be replenished into the same ISA in the same tax year as the withdrawal.  OP withdrew £28K of prior year money within this tax year and so the simple correct answer remains that they can replenish all of that £28K by the end of the tax year.

surreysaver

eskbanker said:

surreysaver said:

Roger175 said:

No. You can only replenish the actual contributions (not the growth), up to the maximum of £20k in the current tax year.

If the ISA concerned was for the 22-23 tax year, you cannot now top it back up

Why can't you replenish the growth?

Yes, as with the other misconception, the actual rules clarify that growth isn't treated any differently, in that anything withdrawn from a flexible ISA can be replenished into the same ISA in the same tax year as the withdrawal.  OP withdrew £28K of prior year money within this tax year and so the simple correct answer remains that they can replenish all of that £28K by the end of the tax year.

That's what I thought!