Are Flexible ISAs a red flag for HMRC? 🚩🚩🚩🚩

Matt057

I'm surprised that flexible ISAs for stocks and shares are legal! So if you withdraw finance from your ISA then you can simply top it back up to the limit within a given time period. I've £40,000 worth of company shares acrued in a Save as You Earn Scheme. Now they've matured, the platform handling these shares have suggested I may wish to deposit £20k then withdraw £20k and top the account back up! Thereby avoiding CAPITAL gains tax! This just doesn't seem right to me and seems just the sort of financial recycling that would trigger an HMRC investigation. What do others think?

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Matt057

I'm surprised that flexible ISAs for stocks and shares are legal! So if you withdraw finance from your ISA then you can simply top it back up to the limit within a given time period. I've £40,000 worth of company shares acrued in a Save as You Earn Scheme. Now they've matured, the platform handling these shares have suggested I may wish to deposit £20k then withdraw £20k and top the account back up! Thereby avoiding CAPITAL gains tax! This just doesn't seem right to me and seems just the sort of financial recycling that would trigger an HMRC investigation. What do others think?

p00hsticks

I'm not sure whether the fact that the ISA is flexible maeks a difference here ? I think you;ve always been able to put £20k of maturing SAYE shares into an ISA within 90 days of them maturing to avoid paying CGT.

Are you saying that you could them selll them. withdraw the cash and then deposit the other £20ks worth of shares ? I'm not sure the SAYE rules would allow that - the gov.uk website clearly specifies a limit of £20k

Tax and Employee Share Schemes: Transferring your shares to an ISA - GOV.UK

you could put the excess over £20k into a pension though…

Newbie_John

1) there's no capital gain tax in ISA

2) when you add £20k then withdraw £20k, there would be £0 CGT even in GIA

TadleyBaggie

Duplicate thread:

poseidon1

https://forums.moneysavingexpert.com/discussion/6670672/are-flexible-isas-a-red-flag-for-hmrc

The rules are precisely as intended by the legislators.

You have the additional benefit of erasing all your SAYE past gains on maturity by judicious 90 day transfer into an ISA ( flexible or otherwise), again as specifically provided by the legislators.

Not sure what your concerns are here?

masonic

https://forums.moneysavingexpert.com/discussion/comment/82019172#Comment_82019172

"Are you saying that you could them selll them. withdraw the cash and then deposit the other £20ks worth of shares ? I'm not sure the SAYE rules would allow that - the gov.uk website clearly specifies a limit of £20k"

That's exactly what is being suggested, and ISA flexibility creates a loophole making it possible to SAYE&ISA as many shares as you like within the practical constraints of the 90 day time limit. The legislation only requires that, at the point of transferring the shares in, there is sufficient headroom in the available annual allowance.

A similar loophole exists for non-flexible ISAs when SAYE options are taken up early in the calendar year, when a £20k transfer can be done before 6th April and another £20k transfer after.

sausage_time

https://forums.moneysavingexpert.com/discussion/comment/82019218#Comment_82019218

Merged, thanks.