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S & S ISA withdrawal/closing advice.
My dad has an ISA with one family and has £45k in it and pays £200 pm into it. He has had this for at least 10 years.
He wants to close it or take out over half of the pot as he wants things doing on his home.
He is 80 odd and Iwe want to know what the tax liability/bill will be if he closes it or withdrawals over half of it.
He has 2 other other cash ISA.
I know he may have to talk to OF about this or IFA but wanted to know before about tax implications.
Any help or advice would be much welcomed.
Comments
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The great thing about an ISA (whether it's a Cash ISA or a Stocks & Shares ISA) is that there is no tax paid on any interest / investment gains within the ISA and any amount of money can be taken out at any time without having to pay tax.
If he moves the money to a non ISA savings account then interest gained in the new savings account will potentially be taxable. No tax liability for anything before it is removed from an ISA though.
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As above, ALL ISAs are completely tax free, full stop, so there are absolutely NO tax implications.
Working out the return on S&S v Cash should be pretty easy and it is not worth paying for advice.
If the S&S ISA is performing better than the cash ISAs then removing whatever is needed from the cash ISAs may be a better idea, future gains and dividends in the S&S ISA should be factored into his decision.
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Becase ISA's are so valuable from a tax status, he should only withdraw money from it, if he actually needs it. If he only needs half, he should only withdrawn half.
The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.4 -
Exactly this.
I wouldn't just take out £22.5k and then start thinking about exactly how much he needs to spend..
I'd get costs, e.g. £5k for a new bathroom, and then withdraw from it to pay the invoice.
Depending on his financial situation, leaving the cash in a non-ISA account could leave him liable to pay tax on the interest he's accruing.Know what you don't0 -
He needs to ask the S&S ISA provider if they permit partial cash withdrawals.
Also needs to see what interest is being paid on his Cash ISA's
Never pay on an estimated bill. Always read and understand your bill1 -
I know he may have to talk to OF about this or IFA but wanted to know before about tax implications.
This is far too simple a matter to get an IFA involved, and it would be costly.
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Thank you.
That's to know.
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I will pass that information onto him.
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I/we are going to call them later this week.
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I can't think of any S&S ISA provider that doesn't allow cash withdrawals. Partial transfers on the other hand might not be permitted
Remember the saying: if it looks too good to be true it almost certainly is.0
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