Flexible ISA and Investment Question

slinger2

20122013 said:

MoneyMan01 said:

But they are both flexible cash ISA's. Surely that means I can withdraw from both, and return the amount I withdraw, regardless of any allowance, as I've built up that amount in the flexible cash ISA wrapper for a reason?

From what I understand, if it is a Flexible Cash ISA, if you want to put back the amount you have withdraw , it had to be pay back to that account by the end of that tax year, the amount can be less but not more than you have taken out. So it you take x amount from Flexi ISA to S&S ISA, and you made Y, I think Y will be within the tax wrapper and if you want, you can move X back to Flexi ISA or Y, as long as Y does not exceed X. ie you cannot pay back more than you have taken out of the Flexi ISA.

However in this case he can't "take x amount from Flexi ISA to S&S ISA" because he's used his £20k allowance already. So it can't go into a S&S ISA. Just because the money's been withdrawn from an ISA doesn't mean that you can break the £20k allowance limit.

If he wants it to get from a Cash ISA (flexi or not) to a S&S ISA he'll have to do a "transfer".

MoneyMan01

Okay so if you transferred the £80k from a Flex Cash ISA to a S&S ISA and invest, could you then, before the end of the tax year, sell the investments, then transfer that back to a Flex Cash ISA?

Hypothetical obviously. Just curious. 

Presuming you could invest that full £80k this tax year, if it is done as a transfer, because that amount is from previous tax years?

Regardless of whether you had a separate flex cash isa from this year maxed out. That can be treated completely apart from the other one you built up, correct?

masonic

MoneyMan01 said:

Okay so if you transferred the £80k from a Flex Cash ISA to a S&S ISA and invest, could you then, before the end of the tax year, sell the investments, then transfer that back to a Flex Cash ISA?

Hypothetical obviously. Just curious. 

Presuming you could invest that full £80k this tax year, if it is done as a transfer, because that amount is from previous tax years?

Regardless of whether you had a separate flex cash isa from this year maxed out. That can be treated completely apart from the other one you built up, correct?

In theory yes, providing you use ISA transfers and each provider accepts transfers in. The ISAs do not have to be flexible because you won't be using flexible withdrawals.

BUT, there is a review ongoing that could see transfers into cash ISAs severely restricted before the end of the tax year. All speculation at this point, but a risk.

slinger2

Yes. That would work. Of course you could transfer back to a Cash ISA at any time, the tax year issue only relates to flexible withdrawals. The other issue is that the investments in the S&S ISA could go up or down in value, so if you transferred the money back to a Cash ISA it might be more or less than you transferred out of the Cash ISA in the first place.

You could also transfer the £20k Cash ISA with this year's money to a S&S ISA, if you wanted.

ColdIron

MoneyMan01 said:

Okay so if you transferred the £80k from a Flex Cash ISA to a S&S ISA and invest, could you then, before the end of the tax year, sell the investments, then transfer that back to a Flex Cash ISA?

Yes that's fine and you could use any ISA(s) to do it. A flexible ISA is only of use if you withdraw from the ISA wrapper, it has no utility with a transfer. You could also transfer the other £20K ISA as well if you want to

MoneyMan01

Thanks all.

I've been keeping an eye on the ISA rumours, and without getting into it, I'd seen it mentioned that they are thinking about lowering the allowance in cash ISA's to £5k, but surely that won't affect the current tax year. No one has a crystal ball though, so anything could happen I guess.

It'll shock none of you to know that I'm likely not going to transfer the cash ISA to a S&S ISA to invest for the year before transferring back, as it's always best to view investing as long term. As mentioned, a years time it could be less than you put in. You'd hope not, but at that point, it's likely you'd leave it there to grow more anyway.

Just good to clarify what the actual options are.

20122013

masonic said:

' Your only option is an ISA transfer, rather than funding from a flexible withdrawal.'

Do you mean you cannot withdraw money ie transfer funds from a Flexi ISA to S&S  ISA? 

masonic

20122013 said:

masonic said:

' Your only option is an ISA transfer, rather than funding from a flexible withdrawal.'

Do you mean you cannot withdraw money ie transfer funds from a Flexi ISA to S&S  ISA? 

If you have used your full allowance in any combination of ISAs, you cannot flexibly withdraw money and pay it into a different ISA, because that would count towards your allowance, of which you have none remaining.

masonic

MoneyMan01 said:

I've been keeping an eye on the ISA rumours, and without getting into it, I'd seen it mentioned that they are thinking about lowering the allowance in cash ISA's to £5k, but surely that won't affect the current tax year. No one has a crystal ball though, so anything could happen I guess.

It's widely expected to be announced in the budget in the autumn. It would be a wide open goal to allow someone with a spare £80k in a S&S ISA to transfer it into a cash ISA after the announcement to get ahead of the restrictions if they come into force next April.

I took no chances and put £16k into a cash ISA already. It is the first cash ISA I've held in almost 15 years.

MoneyMan01

Interesting you say that, as that is almost the complete opposite effect they’re wanting to have. 

Really avoiding trying to get into it, but it feels as though they want more people to invest, rather than get the tax wrapper benefits of the cash ISA.

It does beg the question why, if that is what they want, they don’t go down the route of educating more people on investing, in terms of even school, but without getting off topic I’ll leave it at that. It’s territory I really don’t like getting into conversations on, as people will generally always have extremely passionate opposing views on this kind of thing. 

Anyone have their money stored in Monaco?