Change to the Flexible ISA Regulation (5DDB) dated 15 July 2025

masonic

Sea_Shell said:
I just put the above bold into Google and it does seem to be a huge potential loophole.

It's not a loophole, but it is a means that someone practising tax evasion could cover their tracks. Much the same as failing to report income or capital gains in the hope HMRC won't find out.

FishInGlass

eskbanker said:

FishInGlass said:

Having been alerted to this in the Cash ISA thread I spotted this on investigation.

https://www.legislation.gov.uk/uksi/2025/733/regulation/1/made states the following

Regulation 4 comes into force on 6th April 2027 and has effect in relation to the tax year 2027-28 and subsequent tax years. 

No impact therefore on the current tax year.

But the flexibility changes are regulation 5, not 4, and "The rest of these Regulations come into force on 15th July 2025"....

I stand to be corrected. Just shows how convoluted the information on these web pages actually is.

soulsaver

I found one provider who accepts the new rule... but apparently not aware of all of it:

Shawbrook confirmed they (still) allow current year subscriptions to be added to their fixed term accounts.

When I asked about current year subscriptions that included interest taking it over £20k, he wasn't for accepting that. I didn't push it as the interest is only c£400. 

In fact I didn't actually tell him that the 'new subscription' I was considering was actually lifted from an existing flex ISA in case he wasn't for having that either, as he kept referring to the 14 day transfer rule.

He didn't seem to recognise that the new rule seems to allow current year ISA w/d funds to assume a 'new submission' status to the receiving ISA; particularly that it could a sum exceeding the £20k allowance could still be a legit current year sum.

There isn't anything in the rules that says all the current year subs must be kept together, is there?
 ETA strike - see below

masonic

soulsaver said:

I found one provider who accepts the new rule... but apparently not aware of all of it:

Shawbrook confirmed they (still) allow current year subscriptions to be added to their fixed term accounts.

When I asked about current year subscriptions that included interest taking it over £20k, he wasn't for accepting that. I didn't push it as the interest is only c£400. 

In fact I didn't actually tell him that the 'new subscription' I was considering was actually lifted from an existing flex ISA in case he wasn't for having that either, as he kept referring to the 14 day transfer rule.

He didn't seem to recognise that the new rule seems to allow current year ISA w/d funds to assume a 'new submission' status to the receiving ISA; particularly that it could a sum exceeding the £20k allowance could still be a legit current year sum.

There isn't anything in the rules that says all the current year subs must be kept together, is there?

A sum exceeding £20k cannot be a legit current year sum as a result of ISA flexibility. The only way that can happen is if you inherit a spouse's ISA or your previous provider goes bust and you get a FSCS payout. Current year subscriptions do not include interest, so any interest you flexibly withdraw is treated as prior year and can only be replaced in the original ISA.

soulsaver

Thanks @masonic
Good job I hadn't ISA banked the interest then.. On its way back to Chip  

slinger2

It'd be interesting to know whether Chip regards the £400 as a replacement of the interest or as a replacement of this year's subscription. If the latter, your used allowance with Chip may not stay at 0 but increase to £400, in which case you might exceed your £20k allowance if you put the £20k into a different ISA.

masonic

slinger2 said:

It'd be interesting to know whether Chip regards the £400 as a replacement of the interest or as a replacement of this year's subscription. If the latter, your used allowance with Chip may not stay at 0 but increase to £400, in which case you might exceed your £20k allowance if you put the £20k into a different ISA.

We have seen one or two providers incorrectly prioritise replacement subscriptions to the current year, so definitely worth checking and following up if they get it wrong.

Ch1ll1Phlakes

slinger2 said:

It'd be interesting to know whether Chip regards the £400 as a replacement of the interest or as a replacement of this year's subscription. If the latter, your used allowance with Chip may not stay at 0 but increase to £400, in which case you might exceed your £20k allowance if you put the £20k into a different ISA.

From my own experience with Chip, any withdrawal is added to the replacement allowance of Chip (found under Profile > ISA Allowance), so if I withdraw only interest I can pay it immediately back in with the replacement allowance total being updated.

My Chip ISA has sat with a balance in the replacement allowance section for most of this tax-year with many withdrawals and deposits and has never added a deposit for the current tax-year. Last tax-year I withdrew more than my deposits and the replacement allowance sat at the amount of interest I had earned so I think they have got it right.

Note, I've never had enough funds in the Chip ISA to withdraw over £20k and then repay back in.

soulsaver

slinger2 said:

It'd be interesting to know whether Chip regards the £400 as a replacement of the interest or as a replacement of this year's subscription. If the latter, your used allowance with Chip may not stay at 0 but increase to £400, in which case you might exceed your £20k allowance if you put the £20k into a different ISA.

AIUI the allowance balance will be academic to me unless I want to repatriate more than £19600? And that's got zero chance as the £20k went into a fixed rate ISA not maturing until 2027?

Happy to be corrected.

ETA £340ish funds were repatriated yesterday - allowance bal showing £20k today.

proudgecko

I’m still confused after reading this.
i have a principality flexible 5 access ISA that I opened earlier this year, I have transferred in two previous years subscriptions. I havent used any of this year subscription at all
i have withdrawn a chunk from the Principality ISA hoping to replace it before the end of tax year

but I notice Principality have released a new issue of the ISA at a better interest rate

Can I open the new issue and transfer the current balance and still replace to the new issue ?

If not, can I open the new issue, transfer most of the balance and replace to the old issue, then transfer the remaining balance to the new Issue ?

or at I stuck with this ISA until after I replace?