Flexible ISA rules

beefturnmail

If I put in (say) £20k into a flexible ISA, withdraw £5k and then transfer then remaining £15k to a different, non-flexible ISA; can I put the £5k into the non-flexible ISA at a later date?  Or is the £5k allowance lost?

sammyjammy

No you can't, its not lost, you used it already.

slinger2

When you full transfer of a flexible ISA you lose the option to replace money you've previously withdrawn from that ISA.

If it was a partial transfer and the first ISA still existed, you'd be able to.

beefturnmail

OK thanks, and you can't partial transfer a current years money, right?

sammy_zammy

beefturnmail said:

OK thanks, and you can't partial transfer a current years money, right?

Depends on the provider. Many don’t allow it.

slinger2

beefturnmail said:

OK thanks, and you can't partial transfer a current years money, right?

That's no longer true (since 6 April 2024)

The old rule said:

"The current year’s subscriptions may only be transferred as a whole (with or without the whole or part of any previous years’ subscriptions)"

now it says:

"The current year’s subscriptions and the previous years’ subscriptions may be transferred in whole or in part."

Quite how a partial transfer works in practice is a bit of mystery to me.

beefturnmail

Thanks, what about previous years money.   

Say, its May 2025 and I have £30k  in a flexible isa made up of £20k in 2025-26 subs and £10k from previous years. 

I withdraw £5k into a current account and transfer £22k into a new ISA (£20k from current year plus £2k from previous year), leaving £3k in the old ISA.  Can I later on (before April 2026), deposit the £5k back in the original ISA?  Can I after April 2026?

eskbanker

beefturnmail said:

Thanks, what about previous years money.   

Say, its May 2025 and I have £30k  in a flexible isa made up of £20k in 2025-26 subs and £10k from previous years. 

I withdraw £5k into a current account and transfer £22k into a new ISA (£20k from current year plus £2k from previous year), leaving £3k in the old ISA.  Can I later on (before April 2026), deposit the £5k back in the original ISA?  Can I after April 2026?

You can replace the £5K into the flexible ISA you withdrew it from at any time, if it's still open, but if you do so after the tax year of the withdrawal then it counts towards the annual contribution allowance.

beefturnmail

eskbanker said:

beefturnmail said:

Thanks, what about previous years money.   

Say, its May 2025 and I have £30k  in a flexible isa made up of £20k in 2025-26 subs and £10k from previous years. 

I withdraw £5k into a current account and transfer £22k into a new ISA (£20k from current year plus £2k from previous year), leaving £3k in the old ISA.  Can I later on (before April 2026), deposit the £5k back in the original ISA?  Can I after April 2026?

You can replace the £5K into the flexible ISA you withdrew it from at any time, if it's still open, but if you do so after the tax year of the withdrawal then it counts towards the annual contribution allowance.

Thanks, that's a simple way of thinking of it

slinger2

eskbanker said:

beefturnmail said:

Thanks, what about previous years money.   

Say, its May 2025 and I have £30k  in a flexible isa made up of £20k in 2025-26 subs and £10k from previous years. 

I withdraw £5k into a current account and transfer £22k into a new ISA (£20k from current year plus £2k from previous year), leaving £3k in the old ISA.  Can I later on (before April 2026), deposit the £5k back in the original ISA?  Can I after April 2026?

You can replace the £5K into the flexible ISA you withdrew it from at any time, if it's still open, but if you do so after the tax year of the withdrawal then it counts towards the annual contribution allowance.

If you start doing things with flexible ISAs and/or partial transfers for ISAs that contain a mixture or this year's money and old money, you'll probably need to learn the detailed rules or consult an expect. I don't know all the details

The issue is that you don't get to decide how the withdrawal/transfer money is split between new and old money in the ISA, the ISA regulations specify that.

For instance, in your example "I withdraw £5k into a current account and transfer £22k into a new ISA (£20k from current year plus £2k from previous year), ...", the regulation relating to flexibility says if you make a withdrawal it's the current year's subscription that comes out first. Only when that's all been withdrawn do you start withdrawing old money. So the £5k withdrawn will be this year's money and so you can't transfer "£20k from current year" because there's only £15k left in the ISA.

Might be simpler to keep new and old money in separate ISAs. In that case it's 100% clear whether new or old money is being withdrawn/transferred.

eskbanker

slinger2 said:

eskbanker said:

beefturnmail said:

Thanks, what about previous years money.   

Say, its May 2025 and I have £30k  in a flexible isa made up of £20k in 2025-26 subs and £10k from previous years. 

I withdraw £5k into a current account and transfer £22k into a new ISA (£20k from current year plus £2k from previous year), leaving £3k in the old ISA.  Can I later on (before April 2026), deposit the £5k back in the original ISA?  Can I after April 2026?

You can replace the £5K into the flexible ISA you withdrew it from at any time, if it's still open, but if you do so after the tax year of the withdrawal then it counts towards the annual contribution allowance.

If you start doing things with flexible ISAs and/or partial transfers for ISAs that contain a mixture or this year's money and old money, you'll probably need to learn the detailed rules or consult an expect. I don't know all the details

The issue is that you don't get to decide how the withdrawal/transfer money is split between new and old money in the ISA, the ISA regulations specify that.

For instance, in your example "I withdraw £5k into a current account and transfer £22k into a new ISA (£20k from current year plus £2k from previous year), ...", the regulation relating to flexibility says if you make a withdrawal it's the current year's subscription that comes out first. Only when that's all been withdrawn do you start withdrawing old money. So the £5k withdrawn will be this year's money and so you can't transfer "£20k from current year" because there's only £15k left in the ISA.

Might be simpler to keep new and old money in separate ISAs. In that case it's 100% clear whether new or old money is being withdrawn/transferred.

While you're right that the split between current and prior year money within flexible withdrawals is predetermined rather than chosen by the account holder, I don't believe that actually affects anything here?

The differentiation between current and prior year ISA money used to be significant up to a year ago, when the rule about not being able to subdivide current year money was removed, but, beyond the £20K annual deposit limit, I'm not aware of anything particularly meaningful about current year money anymore, so believe that those stipulations within the flexible ISA rules are now effectively redundant.