Flexible cash ISA - withdrawing interest

MotoRacer

MotoRacer said:

Hi . I’m new to this ! 

Have a 20kflexible cash isa in 24/25yr and a 20k in 25/26yr both with T212 and thought I could withdraw the money made each month to help me poor wages. 

But I see my cash isa pot going down when I do this !!!   Do all these flexible cash isa do this? Can anyone shed any other way to achieve the initial idea or is this not allowed ….does a chip isa do the same?

So can I take the interest each month leaving the invested isa money alone doing its job earning each month. Obviously not with T212 but can I elsewhere 

masonic

MotoRacer said:

MotoRacer said:

Hi . I’m new to this ! 

Have a 20kflexible cash isa in 24/25yr and a 20k in 25/26yr both with T212 and thought I could withdraw the money made each month to help me poor wages. 

But I see my cash isa pot going down when I do this !!!   Do all these flexible cash isa do this? Can anyone shed any other way to achieve the initial idea or is this not allowed ….does a chip isa do the same?

So can I take the interest each month leaving the invested isa money alone doing its job earning each month. Obviously not with T212 but can I elsewhere 

You can withdraw the interest from any easy access ISA without it impacting the money you paid in. But the balance will go down because it originally went up when the interest was credited. This is not particular to cash ISAs. All savings accounts that credit interest to the account work like this.

clairec666

MotoRacer said:

MotoRacer said:

Hi . I’m new to this ! 

Have a 20kflexible cash isa in 24/25yr and a 20k in 25/26yr both with T212 and thought I could withdraw the money made each month to help me poor wages. 

But I see my cash isa pot going down when I do this !!!   Do all these flexible cash isa do this? Can anyone shed any other way to achieve the initial idea or is this not allowed ….does a chip isa do the same?

So can I take the interest each month leaving the invested isa money alone doing its job earning each month. Obviously not with T212 but can I elsewhere 

You can do this with Trading 212.... and any other flexible ISA that pays monthly interest.

Simple example - if you've got £20000 in a cash ISA, you'll get about £75 in monthly interest. You can withdraw that £75, do what you want with it, and still have your £20000 in the ISA earning the next month's interest. By the end of the tax year, you can pay all those interest withdrawals back in without denting your £20000 yearly allowance. 12 x £75 = £900.

MotoRacer

When I’ve done this tho the APP shows my investment in the isa reduced from £20000 to £19925 in your example.  So I’m assuming I’m now only making interest on that new amount and my £75 remains in my interest earnt……

masonic

MotoRacer said:

When I’ve done this tho the APP shows my investment in the isa reduced from £20000 to £19925 in your example.  So I’m assuming I’m now only making interest on that new amount and my £75 remains in my interest earnt……

You cannot withdraw interest before it is credited to the account.

clairec666

Assuming this is the Trading 212 cash ISA, it will show you your "pending interest" which is calculated daily but only added to the account monthly

wmb194

MotoRacer said:

When I’ve done this tho the APP shows my investment in the isa reduced from £20000 to £19925 in your example.  So I’m assuming I’m now only making interest on that new amount and my £75 remains in my interest earnt……

It’s a flexible Isa. It’s showing that you can replace your withdrawals this tax year if you want to. Those figures only relate to the allowance you’ve used this year. You’ll also have an account or portfolio value showing the true balance of what’s in your account.

MotoRacer

It’s Showing me payments interest on cash 3rd April £32.18  & 3rd May £131.98 …..so we saying I’ll be able to withdraw it and not show the cash value reduced below my initial £20,000 investment?  I don’t have to wait a year before I can take the profit out do I ?

masonic

MotoRacer said:

It’s Showing me payments interest on cash 3rd April £32.18  & 3rd May £131.98 …..so we saying I’ll be able to withdraw it and not show the cash value reduced below my initial £20,000 investment?  I don’t have to wait a year before I can take the profit out do I ?

The interest payments should have taken your balance up to £20,032.18, then £20,164.16. If you then withdraw £164.16, you'll be left with £20,000, but as it is a flexible ISA, you'll have used £19,835.84 of your annual allowance as you can replace the £164.16 before the end of the tax year if you wish to.

slinger2

MotoRacer said:

It’s Showing me payments interest on cash 3rd April £32.18  & 3rd May £131.98 …..so we saying I’ll be able to withdraw it and not show the cash value reduced below my initial £20,000 investment?  I don’t have to wait a year before I can take the profit out do I ?

No you don't have to wait. Assuming that it's an easy access account you can take out £164.16 if your wish. Or you can take out £60 or £600, that's up to you. What you take out is taken off your balance of course. Now because it's a flexible ISA you are allowed to replace that money later in the tax year without it counting towards your annual allowance. So the system takes the £164.16 off the allowance so that you can replace it if you want. Exactly the same happens if you withdraw £60 or £600. I know you're determined to think of the £164.16 as the interest but to the ISA it's just money being taken out. At the end of the day it's basically just a savings account.