ISA's HMRC re-Investment restrictions

TheGreenMan

Hello all,
I wonder if someone with experience in this field could clarify something for me;
Example scenario is I have £10K in a stocks & shares ISA with Friendly bank.
FY 24/25 I put in £5K, FY 25/26 I put in £5K.
If I close the S&S ISA selling back the shares lets say for ease I get back exactly £10K.
As I understand the rules, I can re-invest the 25/26 £5K this FY into another ISA no issue and no restriction and doesn't affect my 25/26 ISA allocation (please correct me if I'm wrong on any of that) but my question arises from the 24/25 invested £5K: am I restricted in re-investing this into a different ISA, say a cash ISA with Friendly bank for example? Do I have to wait until FY26/27 to re-invest or is the restriction in perpetuity?? Or perhaps I have misunderstood and there is no restriction on reinvesting prior year funds...??
I hope I've explained that clearly. 
Can anyone shed any light please?
Thanks
P

MeteredOut

Since you have a £20K allowance each tax year (25/26), and you have only invested £5K into an ISA this year, you can invest a minimum of another £15K into any ISA this tax year.

Whether you can also re-use the £5K allowance used by the shares you bought and sold in the Friendly ISA in this tax year will depend on whether that is/was a flexible ISA. Was it?

You can't re-use the £5K allowance from the 24/25 ISA where you've sold the shares - that allowance disappeared when you sold the shares and did not reinvest them in the same tax year (assuming the ISA was flexible). But you can reinvest that money within the parameters of any remaining allowance you have in the 25/26 year.

TheGreenMan

Thanks MeteredOut.

The S&S ISA is a flexi ISA, so on this basis I believe I can reinvest this years invested/withdrawn £5K into any other ISA during this FY without using my annual allowance....is that correct?

"You can't re-use the £5K allowance from the 24/25 ISA where you've sold the shares - that allowance disappeared when you sold the shares and did not reinvest them in the same tax year (assuming the ISA was flexible). But you can reinvest that money within the parameters of any remaining allowance you have in the 25/26 year."

So if I understand you correctly; I can sell the S&S ISA shares for £10K. Move £5K straight into a cash ISA not reducing my remaining 25/26 allowance (£15K) and then move the other £5K into a cash ISA also but this will reduce my 25/26 allocation to £10K....?

THanks
P

eskbanker

Not quite sure what you're trying to achieve but as well as flexibility provisions, you can also use the ISA transfer process to move money from one ISA to another without affecting current year contribution allowance.

TheGreenMan

eskbanker said:

Not quite sure what you're trying to achieve but as well as flexibility provisions, you can also use the ISA transfer process to move money from one ISA to another without affecting current year contribution allowance.

All I want to achieve is to understand if I can reinvest the £10K in this example
Sorry I didn't explain that more clearly. I will use £5K of the allowance if I do but other than that, there are no issues?
As I understand, because £5K was from 24/25, withdrawing & reinvesting WILL use 25/26 allowance?

MeteredOut

TheGreenMan said:

All I want to achieve is to understand if I can reinvest the £10K in this example
Sorry I didn't explain that more clearly. I will use £5K of the allowance if I do but other than that, there are no issues?

If you've only put £5K into an ISA in this tax year, want to put in another £10K in this tax year, and have no plans to put in any more than another £5K before next April 5, then it doesn't matter where the money came from, you can deposit that £10K into an ISA this year with any provider you choose.

The rule is you can only deposit a total of more than £20K of new money into one or more ISAs in any tax year. What is regarded as new money can be a bit more complicated, but it seems you don't need to worry about that.

eskbanker

TheGreenMan said:

eskbanker said:

Not quite sure what you're trying to achieve but as well as flexibility provisions, you can also use the ISA transfer process to move money from one ISA to another without affecting current year contribution allowance.

All I want to achieve is to understand if I can reinvest the £10K in this example
Sorry I didn't explain that more clearly. I will use £5K of the allowance if I do but other than that, there are no issues?
As I understand, because £5K was from 24/25, withdrawing & reinvesting WILL use 25/26 allowance?

Only if you're happy for it to do so - if you wish to reinvest it in another ISA without using any 2025/26 allowance then you can use a transfer.

TheGreenMan

eskbanker said:

TheGreenMan said:

eskbanker said:

Not quite sure what you're trying to achieve but as well as flexibility provisions, you can also use the ISA transfer process to move money from one ISA to another without affecting current year contribution allowance.

All I want to achieve is to understand if I can reinvest the £10K in this example
Sorry I didn't explain that more clearly. I will use £5K of the allowance if I do but other than that, there are no issues?
As I understand, because £5K was from 24/25, withdrawing & reinvesting WILL use 25/26 allowance?

Only if you're happy for it to do so - if you wish to reinvest it in another ISA without using any 2025/26 allowance then you can use a transfer.

Even if the funds are going from a S&S ISA to a Cash ISA? 
Friendly bank have told me the process is to sell the shares in the S&S ISA, withdraw the proceeds, only then I can deposit to a Cash ISA. 

eskbanker

TheGreenMan said:

eskbanker said:

TheGreenMan said:

eskbanker said:

Not quite sure what you're trying to achieve but as well as flexibility provisions, you can also use the ISA transfer process to move money from one ISA to another without affecting current year contribution allowance.

All I want to achieve is to understand if I can reinvest the £10K in this example
Sorry I didn't explain that more clearly. I will use £5K of the allowance if I do but other than that, there are no issues?
As I understand, because £5K was from 24/25, withdrawing & reinvesting WILL use 25/26 allowance?

Only if you're happy for it to do so - if you wish to reinvest it in another ISA without using any 2025/26 allowance then you can use a transfer.

Even if the funds are going from a S&S ISA to a Cash ISA? 
Friendly bank have told me the process is to sell the shares in the S&S ISA, withdraw the proceeds, only then I can deposit to a Cash ISA. 

In which case they're talking nonsense - transfers can be made between any permutations of ISAs!

Just go to your new cash ISA provider and ask them to arrange the transfer - it's simplest if you're transferring the entire contents of the first ISA into the second, as not all support partial transfers, but if the latter is necessary then most will be able to facilitate the transfer.  You may wish to control the timing of the investment sale but even if you don't, the ceding provider should do so when receiving the transfer instruction.

Using flexibility provisions might be more sensible, potentially in conjunction with one or more transfers, but this goes back to the question of what you're actually trying to achieve, i.e. are you wanting to liquidate all of your investments in the first ISA and get the proceeds into a single cash ISA, or something more complex, and are the suspiciously rounded figures in your OP realistic or just examples?