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Partial Transfer out and replacing funds

Hi. I am hoping someone may be able to answer this for me.
I wish to do a partial transfer out from my Nationwide Loyalty ISA to a new provider offering a better interest rate. Both the Nationwide and the new provider's are flexible ISAs.
Once the partial tranfer out is done, am I able to replace these funds again back into my Nationwide ISA before the end of this tax year ?
I have been trying to research this but the rules all seem somewhat ambiguous in places.

Thanks in advance for any clarification offered.
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Comments

  • eskbanker
    eskbanker Posts: 35,345 Forumite
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    A transfer doesn't give you a higher annual allowance, so you're constrained to paying in no more than £20K of new money (from outside ISAs) across all ISAs in any given tax year - is what you have in mind compliant with that overall rule?  If you need further guidance, clarifying the figures involved would help....
  • Thank you for the reply. Yes, I know 20k per tax year is the maximum new money that can be paid in (I have done this for this year) Currently, my understanding is that, with a flexible isa, if you withdraw funds you are still allowed to replace them again in addition to the 20k annual allowance - is that not the case? ie if I take 5k out and still have full 20k allowwance then the amount I can still pay into my isa before end of tax year is 25k, yes?
    What I am not clear on is whether the same rules apply to transfers as they do to withdrawals.

    So, in my case. I wish to perform a partial transfer out of my current ISA of say 50k and transfer this in to a new flexible isa with a different provider. I know this can be done but wha I don't know is if the rules allow me to replace this 50k in the same way as if i withdraw it normally? Hope that makes ?
  • slinger2
    slinger2 Posts: 578 Forumite
    500 Posts Name Dropper
    edited 14 January pm31 3:12PM
    Using a flexible ISA doesn't give you more than the £20k annual allowance. You can withdraw £50k from a flexible ISA and, if you replace it in the same ISA in the same tax year, it'll be back in the ISA system. What you can't do is withdraw the money and then deposit that money into a different ISA; that would count as using part of your £20k allowance.

    You'd need to do a "transfer" to achieve what you want.
  • Yes, that is what I am trying to ask about. When I say a 'partial' I mean by that I wish to make a transfer out from my current isa but not the entire funds - only a partial amount (about 80%) and leave the original isa still open amd active.
    What I am unclear about is whether the rules regarding flexible isa still apply ie "you can withdraw money from your isa and put it back in during the same tax year" 
    I'm thinking it lies in the difference between 'withdrawal' and 'transfer'. I think withdrawal makes the funds then "non isa' funds but transfer kees it still within the isa 'wrapper'. 
  • slinger2
    slinger2 Posts: 578 Forumite
    500 Posts Name Dropper
    edited 14 January pm31 4:06PM
    If you're intending to replace money you withdraw from a flexible ISA you need to make sure it stays open.

    Transfer is the formal process of moving an ISA.
  • kimwp
    kimwp Posts: 2,424 Forumite
    Fifth Anniversary 1,000 Posts Photogenic Name Dropper
    Thank you for the reply. Yes, I know 20k per tax year is the maximum new money that can be paid in (I have done this for this year) Currently, my understanding is that, with a flexible isa, if you withdraw funds you are still allowed to replace them again in addition to the 20k annual allowance - is that not the case? ie if I take 5k out and still have full 20k allowwance then the amount I can still pay into my isa before end of tax year is 25k, yes?
    What I am not clear on is whether the same rules apply to transfers as they do to withdrawals.

    So, in my case. I wish to perform a partial transfer out of my current ISA of say 50k and transfer this in to a new flexible isa with a different provider. I know this can be done but wha I don't know is if the rules allow me to replace this 50k in the same way as if i withdraw it normally? Hope that makes ?
    I wouldn't have thought so, because you aren't putting back the cash you removed from your existing total ISA pot, you are adding to it.

    You get 20k a year allowance to increase your ISA savings. The Flexi ISA allows you to take some of your ISA savings out and put them back. It's not a gateway for adding to your total ISA savings with more than the annual allowance.
    Statement of Affairs (SOA) link: https://www.lemonfool.co.uk/financecalculators/soa.php

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  • jimjames
    jimjames Posts: 18,290 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    What I am unclear about is whether the rules regarding flexible isa still apply ie "you can withdraw money from your isa and put it back in during the same tax year" 
    I'm thinking it lies in the difference between 'withdrawal' and 'transfer'. I think withdrawal makes the funds then "non isa' funds but transfer kees it still within the isa 'wrapper'. 
    No they don't apply because that money is still in the ISA wrapper. If you were allowed to do that it would give you a limitless ISA allowance by transferring some out continually.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • eskbanker
    eskbanker Posts: 35,345 Forumite
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    I think the simplest way to look at it would be to recognise that if you've paid £20K into ISAs this tax year then you can't pay any more new money in until the next tax year.

    However, you can either transfer money from one ISA to another, via the new provider's ISA transfer process, or withdraw from a flexible ISA and replenish that same ISA with the withdrawn amount if still within the same tax year....
  • dcs34
    dcs34 Posts: 631 Forumite
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    My understanding of what you're describing would be:

    Year 1: ISA 1 [£20k]    ISA 2 [£0k - not yet opened]

    Year 2: ISA 1 [£10k]   ISA 2 [£10k]

    You've moved £10k from ISA 1 to ISA 2 using the official ISA transfer process, so to my mind that isn't new ISA money but moving previous year's deposits about.

    Therefore you still have your £20k ISA allowance and could put £10k into each of the ISAs.

    Happy to be corrected!
  • eskbanker
    eskbanker Posts: 35,345 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    dcs34 said:
    My understanding of what you're describing would be:

    Year 1: ISA 1 [£20k]    ISA 2 [£0k - not yet opened]

    Year 2: ISA 1 [£10k]   ISA 2 [£10k]

    You've moved £10k from ISA 1 to ISA 2 using the official ISA transfer process, so to my mind that isn't new ISA money but moving previous year's deposits about.

    Therefore you still have your £20k ISA allowance and could put £10k into each of the ISAs.

    Happy to be corrected!
    OP has already used their current year allowance:
    I know 20k per tax year is the maximum new money that can be paid in (I have done this for this year)
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