Transferring from a Non-Flexible ISA to a Flexible ISA

MeteredOut

eskbanker said:

Virgin states that their easy access cash ISAs are flexible:

Not all ISAs are flexible, however here at Virgin Money our Easy Access Cash ISAs are fully flexible.

https://uk.virginmoney.com/savings/learn/isas/flexible-isa#how-do-easy-access-accounts-work

That's interesting, because they only have 2 ISAs available today, neither of which are marketed as Easy Access. One is Fixed and one is referred to as Direct Access (reduced rate after 3 withdrawals):

https://uk.virginmoney.com/savings/products/defined_access_cash_e_isa_issue_34/

And (my bolding), I don't think its flexible:

Can I withdraw money? 

• Minimum withdrawal amount is £1 (or less if closing).
• Four or more withdrawals per calendar year will result in a reduction to the interest rate payable.
• Any transfer out will be classed as a withdrawal.
• You can have access to your money whenever you need it. Simply log into your account and arrange to take money in the following ways:
  • Transfer to another Virgin Money account, subject to the terms and conditions of that account.
  • By electronic transfer: payments up to £100,000 will be sent by Faster Payments. Payments that are more than £100,000 will be sent by CHAPS free of charge.

• Remember that any money you take out of your ISA will no longer benefit from the tax treatment an ISA receives unless it is transferred directly to another ISA by your ISA provider.

So, I'd summarise the page you linked to as: If we have Easy Access ISAs available, they will be flexible.

The cynic in me believe's they know they have customers with fix rate products maturing at the end of the month, and want to try lock people into more restricted products.

MeteredOut

Back to my original question, Virgin states:

"Remember, any money you put back in must be in the same tax year it was taken out. You can only replace prior years' subscriptions into the same ISA with your original ISA provider. If you close or transfer your ISA you will lose the ability to replace prior years' subscriptions after transfer."

Which seems to contradict what others said above, that transferring an ISA (even if funded from previous tax years) from a non-flexible ISA to a flexible ISA makes all the funds flexible in that new ISA.

Does anyone want to change their mind? Have Virgin got it wrong?

Ch1ll1Phlakes

MeteredOut said:

Back to my original question, Virgin states:

"Remember, any money you put back in must be in the same tax year it was taken out. You can only replace prior years' subscriptions into the same ISA with your original ISA provider. If you close or transfer your ISA you will lose the ability to replace prior years' subscriptions after transfer."

Which seems to contradict what others said above, that transferring an ISA (even if funded from previous tax years) from a non-flexible ISA to a flexible ISA makes all the funds flexible in that new ISA.

Does anyone want to change their mind? Have Virgin got it wrong?

Nope. Not changing my mind. The above isn't a contradiction and Virgin Money are right.
However they are describing case 1 below, not what you trying to do which is case 2.

Case 1
If you withdraw from an ISA before transferring it, that flexibility is lost once the account is closed or moved. For example, withdrawing £5,000 from a flexible ISA and then transferring the remaining £25,000 to another provider means you cannot put the £5,000 back without it counting towards your allowance — even if the new provider also offers a flexible ISA.

Case 2
If you transfer your ISA to a flexible provider before making any withdrawals, then any money you later take out can be replaced within the same tax year without affecting your allowance, because you withdrew from the new flexible ISA. For example, moving £30,000 from a non-flexible ISA to a flexible one and then withdrawing £5,000 means you can repay that £5,000 later in the year without using up any of your £20,000 annual limit.

EDIT: Note, that Virgin Money does not currently offer an flexible ISAs even though they have page on their website promoting that their ISAs are flexible. The flexible accounts described below are 'Easy Access Cash ISAs' which are not currently available.

slinger2

MeteredOut said:

Back to my original question, Virgin states:

"Remember, any money you put back in must be in the same tax year it was taken out. You can only replace prior years' subscriptions into the same ISA with your original ISA provider. If you close or transfer your ISA you will lose the ability to replace prior years' subscriptions after transfer."

Which seems to contradict what others said above, that transferring an ISA (even if funded from previous tax years) from a non-flexible ISA to a flexible ISA makes all the funds flexible in that new ISA.

Does anyone want to change their mind? Have Virgin got it wrong?

The statement "If you close or transfer your ISA you will lose the ability to replace prior years' subscriptions after transfer."  is out of date. Since April 2024 it doesn't make any difference whether it's old or new money. you can only "replace" into the same ISA that you withdrew it from.

Otherwise the rest is true. If you withdraw money from a flexible ISA and then close or transfer that ISA, you lose the right  to "replace" that withdrawn money.

However if you do a full transfer from an ISA to a flexible ISA you can then withdraw/replace in that new ISA, even though you can no longer "replace" money withdrawn from the old ISA (that was never replaced before the account was closed).

MeteredOut

slinger2 said:

MeteredOut said:

Back to my original question, Virgin states:

"Remember, any money you put back in must be in the same tax year it was taken out. You can only replace prior years' subscriptions into the same ISA with your original ISA provider. If you close or transfer your ISA you will lose the ability to replace prior years' subscriptions after transfer."

Which seems to contradict what others said above, that transferring an ISA (even if funded from previous tax years) from a non-flexible ISA to a flexible ISA makes all the funds flexible in that new ISA.

Does anyone want to change their mind? Have Virgin got it wrong?

The statement "If you close or transfer your ISA you will lose the ability to replace prior years' subscriptions after transfer."  is out of date. Since April 2024 it doesn't make any difference whether it's old or new money. you can only "replace" into the same ISA that you withdrew it from.

Otherwise the rest is true. If you withdraw money from a flexible ISA and then close or transfer that ISA, you lose the right  to "replace" that withdrawn money.

However if you do a full transfer from an ISA to a flexible ISA you can then withdraw/replace in that new ISA, even though you can no longer "replace" money withdrawn from the old ISA (that was never replaced before the account was closed).

Thanks, so the Virgin site is wrong (or at best, out of date and ambiguous) in saying "If you ... transfer your ISA you will lose the ability to replace prior years' subscriptions after transfer."

 I saw similar statements on other sites too yesterday.

Archerychick

No it’s not wrong. 

It’s saying that if you have removed funds from a flexible ISA and not replaced them before you transfer out, you will loose your ability to replace them.

If the ISA you have is not flexible, you can’t access that money flexibly. If you withdraw it you can’t replace it.  If you want to, you would need to transfer out to a provider who offer a flexible ISA 

eskbanker

MeteredOut said:

eskbanker said:

Virgin states that their easy access cash ISAs are flexible:

Not all ISAs are flexible, however here at Virgin Money our Easy Access Cash ISAs are fully flexible.

https://uk.virginmoney.com/savings/learn/isas/flexible-isa#how-do-easy-access-accounts-work

That's interesting, because they only have 2 ISAs available today, neither of which are marketed as Easy Access. One is Fixed and one is referred to as Direct Access (reduced rate after 3 withdrawals):

https://uk.virginmoney.com/savings/products/defined_access_cash_e_isa_issue_34/

And (my bolding), I don't think its flexible:

Can I withdraw money? 

• Minimum withdrawal amount is £1 (or less if closing).
• Four or more withdrawals per calendar year will result in a reduction to the interest rate payable.
• Any transfer out will be classed as a withdrawal.
• You can have access to your money whenever you need it. Simply log into your account and arrange to take money in the following ways:
  • Transfer to another Virgin Money account, subject to the terms and conditions of that account.
  • By electronic transfer: payments up to £100,000 will be sent by Faster Payments. Payments that are more than £100,000 will be sent by CHAPS free of charge.

• Remember that any money you take out of your ISA will no longer benefit from the tax treatment an ISA receives unless it is transferred directly to another ISA by your ISA provider.

So, I'd summarise the page you linked to as: If we have Easy Access ISAs available, they will be flexible.

The cynic in me believe's they know they have customers with fix rate products maturing at the end of the month, and want to try lock people into more restricted products.

I don't see that bolded wording (about transfers) as being relevant to the subject of flexibility, it's simply confirming that a transfer out would be counted as one of the limited number of permitted withdrawals?  And my assumption is that the variable rate product to which they convert maturing fixed rate ones will be an easy access one, albeit one that isn't offered to new customers, but worth confirming this with them....

MeteredOut

eskbanker said:

MeteredOut said:

eskbanker said:

Virgin states that their easy access cash ISAs are flexible:

Not all ISAs are flexible, however here at Virgin Money our Easy Access Cash ISAs are fully flexible.

https://uk.virginmoney.com/savings/learn/isas/flexible-isa#how-do-easy-access-accounts-work

That's interesting, because they only have 2 ISAs available today, neither of which are marketed as Easy Access. One is Fixed and one is referred to as Direct Access (reduced rate after 3 withdrawals):

https://uk.virginmoney.com/savings/products/defined_access_cash_e_isa_issue_34/

And (my bolding), I don't think its flexible:

Can I withdraw money? 

• Minimum withdrawal amount is £1 (or less if closing).
• Four or more withdrawals per calendar year will result in a reduction to the interest rate payable.
• Any transfer out will be classed as a withdrawal.
• You can have access to your money whenever you need it. Simply log into your account and arrange to take money in the following ways:
  • Transfer to another Virgin Money account, subject to the terms and conditions of that account.
  • By electronic transfer: payments up to £100,000 will be sent by Faster Payments. Payments that are more than £100,000 will be sent by CHAPS free of charge.

• Remember that any money you take out of your ISA will no longer benefit from the tax treatment an ISA receives unless it is transferred directly to another ISA by your ISA provider.

So, I'd summarise the page you linked to as: If we have Easy Access ISAs available, they will be flexible.

The cynic in me believe's they know they have customers with fix rate products maturing at the end of the month, and want to try lock people into more restricted products.

I don't see that bolded wording (about transfers) as being relevant to the subject of flexibility, it's simply confirming that a transfer out would be counted as one of the limited number of permitted withdrawals?  And my assumption is that the variable rate product to which they convert maturing fixed rate ones will be an easy access one, albeit one that isn't offered to new customers, but worth confirming this with them....

In absence of them saying that account is flexible, I have to assume it is not rather than assume it is. I know, I could phone and ask, but that basic info should be on their product page.

Will wait to see what options they provide closer to maturity. As you say, it might well be a flexible ISA not available in the open market.