Are all flexible ISAs like this or is it just Vanguard?

dharm999

I have an ISA  with Vanguard, invested in a MMF and a gilt fund, both income units.  I withdraw the monthly income from both, and I noticed that on the Vanguard dashboard it shows me the remaining ISA allowance for this tax year.  As I have withdrawn money from the ISA, the amount showing as available is more than £20,000.  As of now, I haven’t touched my SIPP, but on the face of it, if I left investing in my ISA until the end of the tax year, the ‘remaining allowance’ would be significantly above £20,000, so giving me the opportunity to take a tax free cash amount from my SIPP of over £20,000 and putting it all in to my ISA, without breaching the annual ISA limit.  Is this situation normal and applicable to all flexible ISAs, or is it a quirk of the Vanguard one?

Maybe this is common knowledge to everyone, but it wasn’t to me, and looks like an opportunity to put more than the annual limit in to an ISA.  Or have I simply misunderstood?

eskbanker

It's the same for all flexible ISAs - if you withdraw money from one then you're entitled to repay it into the same ISA within the same tax year, so that's reflected in a higher remaining allowance.  It doesn't give you anything extra, as the additional figure is simply what you'd have had if you'd left it in the ISA in the first place....

slinger2

"Replacements" into a flexible ISA don't count towards your annual allowance. So if you "withdraw" £80,000 from an ISA you can put £100,000 back in (as long as it's the same ISA and in the same tax year that you withdrew it). £80,000 is the "replacement" + £20,000 of new money (assuming that you've not used any of your allowance elsewhere). It's not really correct to call these numbers over £20k "remaining allowance" since it's a combination of the actual allowance and money withdrawn that can be replaced, but lots of the providers do this.