FSCS protection for cash ISA

Annie1612

I’m not sure how to word this question but here goes…

If the bank you held your Cash ISA in was to fail and you were compensated by the FSCS for the full amount of money, would you still have the ISA tax free amount you started with or would you have to begin again building that up. For instance if you had 100k in your ISA protected from tax saved over a number of years, would you lose that protection?

Vitor

HMRC has long provided for what is effectively a reinstatement route when an ISA manager is declared in default. The key rule is that you can make a single replacement payment into another ISA up to the value of the failed ISA balance, including interest at the date of default, and that payment does not count towards the annual ISA subscription limit. https://assets.publishing.service.gov.uk/media/5a74b882ed915d502d6ca718/isa-reinstatement.pdf

masonic

This is very similar to the process used when an ISA is inherited by a spouse.

The last time I'm aware of it happening in practice (failure of DotComUnity credit union), ISA holders were issued with a letter entitling them to the APS.