Flexible and Non-Flexible ISA

norsefox

I received some inheritance back in March which I added to a Vanguard flexible S&S ISA for around £15k.  I then withdrew it in late April as I needed it for house renovations.  I deliberately timed the contribution and withdrawal to give me the opportunity to 'carry' some of last year's allowance into this year.

Given it's a flexible ISA, I now have £35k available for contributions within this financial year, to that ISA.  I am also fortunate to have that amount of cash available to hand at this time.

I do have a second non-flexible ISA (AJ Bell), which I like to use to separate funds.  Yes, money is fungible, and largely the investments are very similar, but I prefer to have them separate for my own allocations.

My question is: Can I split my contributions this year to add £15k back into the flexible ISA, and add the 'normal' allowance of £20k into a separate non-flexible ISA?

Or, should I really be adding in all £35k into the flexible ISA, and then do a transfer?

FrugaiMacDugal

From MSE.

If you don't use your ISA allowance by the end of the tax year, you lose it

Each tax year (6 April until the next 5 April), everyone aged 18 or over gets a new ISA allowance. But if you don't use it, you lose it.

Once that year's closed, you can't put another penny in that specific ISA allowance. So if you put aside nothing in the 2023/24 tax year, when the maximum was £20,000, that's it – it's gone. Or if you put £2,000 in during 2023/24, you can't now top it up as that tax year is closed.

If you do deposit the cash in time, you can keep it in there, tax-free, for as long as you like. Then, as soon as the new tax year starts on 6 April, you can deposit a whole new year's allowance.

kimwp

norsefox said:

I received some inheritance back in March which I added to a Vanguard flexible S&S ISA for around £15k.  I then withdrew it in late April as I needed it for house renovations.  I deliberately timed the contribution and withdrawal to give me the opportunity to 'carry' some of last year's allowance into this year.

Given it's a flexible ISA, I now have £35k available for contributions within this financial year, to that ISA.  I am also fortunate to have that amount of cash available to hand at this time.

I do have a second non-flexible ISA (AJ Bell), which I like to use to separate funds.  Yes, money is fungible, and largely the investments are very similar, but I prefer to have them separate for my own allocations.

My question is: Can I split my contributions this year to add £15k back into the flexible ISA, and add the 'normal' allowance of £20k into a separate non-flexible ISA?

Or, should I really be adding in all £35k into the flexible ISA, and then do a transfer?

Both are in line with the ISA rules, as far as I am aware. 

norsefox

FrugaiMacDugal said:

From MSE.

If you don't use your ISA allowance by the end of the tax year, you lose it

Each tax year (6 April until the next 5 April), everyone aged 18 or over gets a new ISA allowance. But if you don't use it, you lose it.

Once that year's closed, you can't put another penny in that specific ISA allowance. So if you put aside nothing in the 2023/24 tax year, when the maximum was £20,000, that's it – it's gone. Or if you put £2,000 in during 2023/24, you can't now top it up as that tax year is closed.

If you do deposit the cash in time, you can keep it in there, tax-free, for as long as you like. Then, as soon as the new tax year starts on 6 April, you can deposit a whole new year's allowance.

I'm not sure this is relevant to a Flexible Isa and perhaps my explanation was confusing.  

Basically, I have withdrawn £15k in 2025-2026.  I can add that back to my existing flexible ISA.  I therefore have a total allowance of £35k for 2025-2026.

My question is whether I can add the new allowance of £20k to a different ISA, or whether that will cause me problems.

There's no question that £35k can go into the flexible ISA - my question is whether it can be split without issue.

Albermarle

norsefox said:

I received some inheritance back in March which I added to a Vanguard flexible S&S ISA for around £15k.  I then withdrew it in late April as I needed it for house renovations.  I deliberately timed the contribution and withdrawal to give me the opportunity to 'carry' some of last year's allowance into this year.

Given it's a flexible ISA, I now have £35k available for contributions within this financial year, to that ISA.  I am also fortunate to have that amount of cash available to hand at this time.

I do have a second non-flexible ISA (AJ Bell), which I like to use to separate funds.  Yes, money is fungible, and largely the investments are very similar, but I prefer to have them separate for my own allocations.

My question is: Can I split my contributions this year to add £15k back into the flexible ISA, and add the 'normal' allowance of £20k into a separate non-flexible ISA?

Or, should I really be adding in all £35k into the flexible ISA, and then do a transfer?

Yes you can but normally the advice is not to use S&S ISAs as some kind of quasi savings account to dip in and out of .
They should be a long term project.

sgthammer

Yes you can but normally the advice is not to use S&S ISAs as some kind of quasi savings account to dip in and out of .

They should be a long term project.

It's not a "quasi" anything. It's a savings account, the clue's in the name.

Ideally all savings should be a long term project. But life happens. The advantage of a flexible ISA over a standard one is precisely that you can dip into it in an emergency and then replenish within the term. That liquidity is usually priced into the difference in the interest rate, which is probably why the OP is thinking about putting this year's allowance into a stricter fund. Whether that's the best choice is entirely down to the OP's circumstances and priorities, as it should be.

AlanP_2

sgthammer said:

Yes you can but normally the advice is not to use S&S ISAs as some kind of quasi savings account to dip in and out of .

They should be a long term project.

It's not a "quasi" anything. It's a savings account, the clue's in the name.

Ideally all savings should be a long term project. But life happens. The advantage of a flexible ISA over a standard one is precisely that you can dip into it in an emergency and then replenish within the term. That liquidity is usually priced into the difference in the interest rate, which is probably why the OP is thinking about putting this year's allowance into a stricter fund. Whether that's the best choice is entirely down to the OP's circumstances and priorities, as it should be.

True, but as the OP used a STOCKS & SHARES Flexible ISA then the interest rate comment possibly does not apply as the funds may have been "invested" as "opposed" to saved.

As Albermarle points out a S&S INVESTMENT is not the ideal vehicle to use as a "quasi" SAVINGS account for the short term.

poseidon1

AlanP_2 said:

sgthammer said:

Yes you can but normally the advice is not to use S&S ISAs as some kind of quasi savings account to dip in and out of .

They should be a long term project.

It's not a "quasi" anything. It's a savings account, the clue's in the name.

Ideally all savings should be a long term project. But life happens. The advantage of a flexible ISA over a standard one is precisely that you can dip into it in an emergency and then replenish within the term. That liquidity is usually priced into the difference in the interest rate, which is probably why the OP is thinking about putting this year's allowance into a stricter fund. Whether that's the best choice is entirely down to the OP's circumstances and priorities, as it should be.

True, but as the OP used a STOCKS & SHARES Flexible ISA then the interest rate comment possibly does not apply as the funds may have been "invested" as "opposed" to saved.

As Albermarle points out a S&S INVESTMENT is not the ideal vehicle to use as a "quasi" SAVINGS account for the short term.

Indeed any investment in the stockmarket  ( inside or outside an ISA ) should be considered to be minimally  medium term ( 5 years plus) .

Investing is not saving and investments are not suitable for anyone's emergency quick access fund. The fact this thread revolves around a flexible S & S ISA, obscures this fundamental point.

Albermarle made an entirely valid observation.

norsefox

AlanP_2 said:

sgthammer said:

Yes you can but normally the advice is not to use S&S ISAs as some kind of quasi savings account to dip in and out of .

They should be a long term project.

It's not a "quasi" anything. It's a savings account, the clue's in the name.

Ideally all savings should be a long term project. But life happens. The advantage of a flexible ISA over a standard one is precisely that you can dip into it in an emergency and then replenish within the term. That liquidity is usually priced into the difference in the interest rate, which is probably why the OP is thinking about putting this year's allowance into a stricter fund. Whether that's the best choice is entirely down to the OP's circumstances and priorities, as it should be.

True, but as the OP used a STOCKS & SHARES Flexible ISA then the interest rate comment possibly does not apply as the funds may have been "invested" as "opposed" to saved.

As Albermarle points out a S&S INVESTMENT is not the ideal vehicle to use as a "quasi" SAVINGS account for the short term.

I appreciate the wisdom, but I parked the cash in the S&S ISA for a few weeks purely to ensure I 'carried' additional headroom into this financial year.  So no concerns there.

All of this £35k is to be invested for long past 5 years.  

My query was purely on the logistical point of view because of the flexible elements and the potential complication of two different platforms.  The ISA versus S&S ISA wasn't relevant and cash/investment wasn't relevant.

I didn't include as it's not impactful to the question being asked, and the addition of more detail can lead to more questions.  Though I appreciate in this instance the intention has led to that result anyway!

So to confirm: £15k back into Vanguard; £20k into AJ Bell.  No issues from HMRC come next year? :-)

masonic

I fail to see where this could be confusing. If I'm understanding your post correctly, you haven't yet used your 2025/26 allowance at all. You are allowed to use it wherever you like. The fact you've made a flexible withdrawal of previous year funds from an existing ISA makes no difference to that at all. Only the flexibly withdrawn prior year funds must be returned to the same account.

Even if you had paid another £20k into Vanguard this tax year, before flexibly withdrawing £35k, you'd still be able to return £15k to Vanguard and pay £20k into AJ Bell.

kimwp

masonic said:

I fail to see where this could be confusing. If I'm understanding your post correctly, you haven't yet used your 2025/26 allowance at all. You are allowed to use it wherever you like. The fact you've made a flexible withdrawal of previous year funds from an existing ISA makes no difference to that at all. Only the flexibly withdrawn prior year funds must be returned to the same account.

Even if you had paid another £20k into Vanguard this tax year, before flexibly withdrawing £35k, you'd still be able to return £15k to Vanguard and pay £20k into AJ Bell.

I think the OP is just double checking. The rules on ISA's particularly flexible ISAs have changed a lot recently, with very little rhyme or reason.