Question on Flexible ISA

Salem123 · 16 April 2018 at 9:57PM

Hello,
ok, its late and financial year has already started. I'm still shopping around for good rates and have finally chosen a 1 year fixed rate. Question i have got is, if i withdraw some amount from my flexible ISA which i opened last year and deposit the rest of the money into a 1 year fixed ISA this year, will i loose the amount in this years allowance? Meaning for e.g, if i withdraw 1k from my flexible ISA before depositing it to 1 year ISA, will i be able to save only 19k for this year allowance eventhough the money is from previous savings? I hope i conveyed my question without confusing anyone. :rotfl:Could someone help me please?

Thanks.

firestone · 16 April 2018 at 11:44PM

its normally best to transfer money from a previous years ISA to save the allowance in a new year or using your example transfer not withdraw £1000 so keeping the £20000

Westie983 · 17 April 2018 at 12:45PM

Salem123 wrote: »

Hello,
ok, its late and financial year has already started. I'm still shopping around for good rates and have finally chosen a 1 year fixed rate. Question i have got is, if i withdraw some amount from my flexible ISA which i opened last year and deposit the rest of the money into a 1 year fixed ISA this year, will i loose the amount in this years allowance? Meaning for e.g, if i withdraw 1k from my flexible ISA before depositing it to 1 year ISA, will i be able to save only 19k for this year allowance eventhough the money is from previous savings? I hope i conveyed my question without confusing anyone. :rotfl:Could someone help me please?

Thanks.

You will need to do a ISA transfer and not a withdrawal, you will also need to check if your current ISA provider allows partial transfers or not as many only offer full transfer into new isa products.

You also need to check or know that once the money is in the fixed ISA there is no withdrawals.

I read lots of customers on here that thinks the rate is good as its fixed but then baffled when they cant pay in each month as its a fixed product and the window to fund can be short (between 7 - 14 up to 30 days)

Westie983

Salem123 · 18 April 2018 at 12:38PM

Hello both,
Thanks for your valuable response . From what I understand , its better to transfer the full money and not withdraw anything.

Also, a very good point on checking whether I could pay in money each month into Fxied ISA. If not, it would be a big problem for me !!!

Westie983 · 18 April 2018 at 1:19PM

Salem123 wrote: »

Also, a very good point on checking whether I could pay in money each month into Fxied ISA. If not, it would be a big problem for me !!!

Im 99.99% sure that you will not be able to fund your fixed ISA monthly.

If this is what you want you will need to have a look at the ISA's which are Instant Access and not a fixed product, there are also some regular saver ISA's on the market, but not sure if they are open to new customers.

The ones I can think off the top of my head are

Nationwide
Barclays

Westie983

Salem123 · 20 April 2018 at 5:55PM

Hi Westie,
I just called KentReliance who are providing 1.48% on 1 year fixed Rate ISA. So my questions to them were:

1. If I withdraw 1k from my current flexible ISA and want to transfer the rest, does their bank allow the transfer ? Ans was that yes I can which I need to mention in the ISA transfer form where it asks for how much to transfer.

2. Second question was whether this product allow me to deposit monthly within my allowance for this year. Ans was yes this is allowed.

The only thing which i'm still confused is, whether withdrawing 1k from last year ISA will reduce my allowance by 1k for this year. I think it is , but not very sure !!!

I went through their website to understand the product more and it says "Top up anytime within ISA limits"

Am I getting it right or missing something ??

Thanks for your help.

eskbanker · 20 April 2018 at 6:20PM

Salem123 wrote: »

The only thing which i'm still confused is, whether withdrawing 1k from last year ISA will reduce my allowance by 1k for this year. I think it is , but not very sure !!!

Withdrawing money from a previous year's ISA doesn't actually reduce any allowances as such, but if you then pay it into a different ISA (rather than transferring) then it counts towards this year's allowance, or alternatively you could pay it back into the same flexible ISA before the end of this tax year without it counting towards this year's allowance. If you go down the latter route you could transfer it elsewhere without impacting on allowances again, although only to an account that allows transfers in (the Kent one only takes them in the first 30 days)....

Having said that, I'm not sure I really follow what you're trying to achieve with separate withdrawals and transfers - what's the starting position and what money do see being in which accounts by the end of this tax year?

Westie983 · 23 April 2018 at 6:20AM

As mentioned above if you withdraw 1k and pay it into the ISA then that 1k will count towards the 20k limit for the year, but if you transfer your balance from your existing ISA (within 30 days) lets say for example there is £1500 in there. Your ISA will have £1500 + 20k limit = £21500

So if you are doing a partial transfer I cant see why you just dont transfer all of the existing ISA, and then you still have the full limit to use. Of course if you are never going to make the full amount withdrawing from existing ISA and paying it in will make little difference.

As above I'm a little confused why you would want to withdraw and transfer though.

Westie983

Salem123 · 25 April 2018 at 3:34PM

Hello both,
thanks for your response. I have a perrsonal need for which i need to withdraw little money from flexible before i convert the rest into a fixed ISA for a year. Hence the question on withdrawal from Flexible ISA.

AS i udnerstand, once i transfer the current ISA to fixed 1 year ISA, i cant withdraw the money for personal need

Thanks.

bowlhead99 · 25 April 2018 at 4:30PM

Salem123 wrote: »

AS i udnerstand, once i transfer the current ISA to fixed 1 year ISA, i cant withdraw the money for personal need

The whole idea of committing to a 'fixed 1 year ISA' is that they will pay you a high fixed rate of interest on your cash deposit because they know you won't be planning to take it back before the term expires, so they can lend it out to mortgage customers or personal loan customers without worrying about having to pay you back next week.

If you do need to urgently get to your money before the year is up -for example, because you had not been very truthful with yourself when you said you could definitely afford to lock it away in a product fixed for a year - they will let you withdraw or transfer elsewhere; but will charge you a penalty equivalent to 180 days interest on the money you withdraw. If the money you withdraw has not actually been there for as long as 180 days, you might get back less than you had put in, after the penalty has been taken from you.

So, if you need money for personal reasons over the next year you have two basic choices. Either take that money out of your old flexible ISA first and transfer a smaller remaining balance over to the new fixed ISA, closing the old ISA. Or keep the flexible ISA open and when you complete the transfer form to the new fixed one, ask to transfer a specific amount of money (that you can afford to commit for a year) and leave the rest in your previous flexible ISA.

i cant withdraw the money for personal need

Cheer up, there's no need for a sad face.

If you want the money to be flexibly accessible without a penalty, use a flexible or normal easy-access product.

If instead you don't need the money to be accessible in the next year and would prefer to get a higher interest rate, use a 1 year fixed product but be aware there will be a penalty if you change your mind and want the money back within the 1 year fixed period.

If you're not sure if you need some of the money or not, just put some in the fix and some not.

It's a good thing that you have a choice of accounts, not a bad thing, so that's

not

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