Withdraw cash from ISA
Barry_Bear
Posts: 212 Forumite
The Gov.UK website page on ISAs and withdrawing your money says "Your provider can tell you if your ISA is flexible." Does this refer only to cash ISAs or does the flexible ISA rule cover stocks and shares ISA too?
Can you sell investments and take out the cash, then replace the cash within the same tax year so none of the annual ISA investment allowance is lost?
Can you sell investments and take out the cash, then replace the cash within the same tax year so none of the annual ISA investment allowance is lost?
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Comments
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Other ISA types can be flexible too, the government ISA guidance pages explain this at https://www.gov.uk/guidance/manage-isa-subscriptions-for-your-investors#subscriptions-that-do-not-count-towards-the-annual-subscription-limits and there are some examples at this page.0
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Some S&S ISAs are flexible, for instance Charles Stanley Direct
https://cdn.charles-stanley-direct.co.uk/sites/default/files/img/documents/csd_flexible_isa_faqs_0.pdf0 -
Thank you eskbanker.
One of the examples on the link is:
"Replacement of flexible ISA previous year funds example
Ms Coates subscribes £20,000 to her flexible stocks and shares ISA on
6 April 2017. On 1 October the value of the investments is £22,000 and
she sells investments and withdraws cash of £21,000. Her ‘net’ current
year subscriptions at this point are £nil and she can use her full annual
subscription allowance of £20,000 as she chooses between her stocks
and shares, any cash, innovative finance or Lifetime ISA she subscribes
to in 2017-18. The withdrawal over and above the amount subscribed of
£1000 (£21,000 - £20,000) can only be replaced in her stocks and
shares ISA."
So if your Stocks & Shares ISA platform provider is "flexible" then the amount that can be withdrawn and replaced within a tax year is not limited to the £20,000 allowance, but to the total value of your ISA?
So if you have a stocks and shares ISA value £70,000 and you sell your investments, you can withdraw all £70,000 and can put £70,000 back in again within the same tax year and it all remains in the ISA tax wrapper?0 -
Right answer but wrong workings - that example is referring specifically to growth that takes current year money beyond £20K, rather than including funds from prior years, but yes, the latter can be withdrawn and then replaced if the ISA concerned is flexible! Care needs to be taken when dealing with money from multiple tax years, especially regarding the order in which withdrawals and replacements are identified, there's some more on this at https://www.moneysavingexpert.com/savings/flexible-ISAs/Barry_Bear wrote: »Thank you eskbanker.
One of the examples on the link is:
"Replacement of flexible ISA previous year funds example
Ms Coates subscribes £20,000 to her flexible stocks and shares ISA on
6 April 2017. On 1 October the value of the investments is £22,000 and
she sells investments and withdraws cash of £21,000. Her ‘net’ current
year subscriptions at this point are £nil and she can use her full annual
subscription allowance of £20,000 as she chooses between her stocks
and shares, any cash, innovative finance or Lifetime ISA she subscribes
to in 2017-18. The withdrawal over and above the amount subscribed of
£1000 (£21,000 - £20,000) can only be replaced in her stocks and
shares ISA."
So if your Stocks & Shares ISA platform provider is "flexible" then the amount that can be withdrawn and replaced within a tax year is not limited to the £20,000 allowance, but to the total value of your ISA?
So if you have a stocks and shares ISA value £70,000 and you sell your investments, you can withdraw all £70,000 and can put £70,000 back in again within the same tax year and it all remains in the ISA tax wrapper?0 -
Thanks again eskbanker.
The MSE page also says that it's more complicated when withdrawing and then replacing current and previous amounts. Like with my example, withdrawing £70,000 and replacing it. But I cannot see what is the potential problem that needs to be avoided? If you take £70,000 out, and put the £70,000 back in, within the same tax year, what could go wrong? If the £70,000 includes a £20,000 paid within the current tax year, then I assume you repay the £70,000 and cannot make any further payments into your ISA until after the next 5 April when your new £20,000 allowance starts. If you have not contributed anythng into your ISA in teh current tax year then you can repay the £70,000 and still have £20,000 allowance if you want to take that up. Am I missing something?
Another question, the MSE page says:
"There are certain kinds of ISAs that can't be flexible – these are junior ISAs, Help to Buy ISAs, Lifetime ISAs and any element of a stocks and shares ISA that is NOT cash, ie, shares, bonds or funds."
Is this saying you cannot withdraw the stocks or shares themselves i.e. you cannot do an in specie transfer of the fund units to a dealing account and then transfer them back to the ISA (why would anyone want to?) but you can sell your shares and bonds funds and withdraw the amount as cash, and replace the cash later and repurchase the same or other stocks and bonds funds later?0 -
My understanding is that the complexities arise where it's not as simple as taking out one sum and returning the same amount to the same account, but I suspect that there's limited value in getting into increasingly abstract theory - what is the scenario you actually have in mind with your flexible ISA(s)?Barry_Bear wrote: »The MSE page also says that it's more complicated when withdrawing and then replacing current and previous amounts. Like with my example, withdrawing £70,000 and replacing it. But I cannot see what is the potential problem that needs to be avoided? If you take £70,000 out, and put the £70,000 back in, within the same tax year, what could go wrong? If the £70,000 includes a £20,000 paid within the current tax year, then I assume you repay the £70,000 and cannot make any further payments into your ISA until after the next 5 April when your new £20,000 allowance starts. If you have not contributed anythng into your ISA in teh current tax year then you can repay the £70,000 and still have £20,000 allowance if you want to take that up. Am I missing something?
The gov.uk guidance linked above is concise: "Flexibility can be offered in respect of cash only".Barry_Bear wrote: »Another question, the MSE page says:
"There are certain kinds of ISAs that can't be flexible – these are junior ISAs, Help to Buy ISAs, Lifetime ISAs and any element of a stocks and shares ISA that is NOT cash, ie, shares, bonds or funds."
Is this saying you cannot withdraw the stocks or shares themselves i.e. you cannot do an in specie transfer of the fund units to a dealing account and then transfer them back to the ISA (why would anyone want to?) but you can sell your shares and bonds funds and withdraw the amount as cash, and replace the cash later and repurchase the same or other stocks and bonds funds later?
In any case, you can't do an in specie transfer of funds from a S&S ISA to a non-ISA dealing account anyway - anything crossing the boundary between ISA world and non-ISA world in either direction has to be in cash, with one or two minor exceptions such as sharesave schemes.0 -
Thank you. Clear now!0
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