Flexible ISA rule clarification

toothdoctor

I know rules around flexible ISAs have been talked to death on here but could I ask to clarify something in this situation please.

The Scenario:

I deposit the full 20k in Bank A at the start of the tax year. Bank B is now offering a better rate so I withdraw the 20k from bank A and deposit it in bank B. For clarity both ISAs are flexible, so my understanding is that I can do this. Fast forward 2 months and the balance in bank B is 20k plus £100 interest. Bank B ‘s introductory bonus rate has now reduced to below that of Bank A.

Can I withdraw the £20,100 from Bank B and deposit in bank A or can I only withdraw and deposit the original 20k leaving £100 gained in interest in Bank B. If I wanted the £100 in Bank A then would I need to do a transfer rather than withdraw and deposit.

Thanks

eskbanker

Can I withdraw the £20,100 from Bank B and deposit in bank A or can I only withdraw and deposit the original 20k leaving £100 gained in interest in Bank B. If I wanted the £100 in Bank A then would I need to do a transfer rather than withdraw and deposit.

It's the latter of your two options, i.e. interest earned on current year subscriptions sits outside the flexibility arrangements and (if not transferring) you can only move up to £20K between ISAs, unless there are prior year subscriptions involved.

toothdoctor

Thanks for the clarification. That helps a lot