Principality Flexible ISA

ashteadgirl

I have a Online Bonus 5 Access Cash ISA Issue 7 and have been told that funds depoisted this tax year must be replaced into the Principality ISA and if placed in another ISA will be taken as new isa funds. £20K placed into Principality this tax year and wish to move some of those funds to another ISA. This seems to contradict the information in the guide on the MSE to flexible Isas and unable to find helpful/definitive on .gov website.

Are Principality right or wrong?

TIA of help

eskbanker

Whoever told you "that funds depoisted this tax year must be replaced into the Principality ISA and if placed in another ISA will be taken as new isa funds" was wrong.

Edit: the key wording, differentiating between previous and current year funds in flexible ISAs, is:

The withdrawal of previous year funds from a flexible ISA can only be replaced in the account from where the withdrawal was made and must be replaced in the same tax year.

The withdrawal of current year subscriptions from a flexible ISA automatically reduces the net subscription to that ISA meaning that additional subscriptions can be made to other ISAs (flexible or non-flexible) in the remainder of that tax year.

https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#flexible-isas

macy08

If you withdraw the money yourself that could be a problem. There is no reason why you couldn't just do a normal ISA transfer from Principality to your new ISA provider.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82085148#Comment_82085148

One of the key distinguishing features of flexible ISAs is that you can effectively self-transfer by withdrawing and redepositing without this counting as new money. A transfer might fulfil OP's requirement, as long as the parties support partial transfers, but it isn't necessary…

mrcrumb

Principality don’t allow you to split current year contributions across multiple cash ISAa in their range. Therefore you can’t withdraw part of this years subscriptions and then, at a later time this tax year, replace into a second ISA with them (it has to be the same ISA - as you have been told by customer services).

You can, however, replace the subscriptions into another cash with a different provider.

If you are withdrawing previous years money, it can only be replaced in the same ISA.