Flexible ISA rules
by Alexander Beard, on Nov 21, 2018 9:09:54 AM
A flexible ISA allows the saver to withdraw cash and replace it during the same tax year without reducing the current year’s allowance. They can also withdraw cash from previous tax years.
Withdrawals can be made from a cash ISA or any cash held in a stocks and shares or Innovative Finance ISA (including from the sale of investments) provided the ISA Manager has adopted the ‘Flexible ISA’ rules. Offering flexibility is optional for ISA managers, but this flexibility is not available for Junior ISAs or Lifetime ISAs. Where a Help to Buy ISA is operated under flexible terms and conditions, replacement subscriptions cannot exceed the monthly Help to Buy limits.
Flexible ISA withdrawals are taken initially from the current year’s subscriptions, and then from the previous year funds depending on the amount to be withdrawn.
When the withdrawn cash is repaid to the ISA, it replaces the subscriptions from previous years before those from the current year. The ‘one ISA of each type per tax year’ rule continues to apply.
Where a flexible ISA has current year subscriptions only, any subsequent subscriptions in the same tax year will first replace the cash that has been withdrawn, and any withdrawals over and above the amount subscribed, for example, income or capital growth - can only be replaced in that ISA.
Always check with the ISA provider as they may have minimum investment requirements to ensure the ISA remains open.
Article taken from ‘roundup from ThreeSixty’ Autumn 2018 https://publications.threesixtyservices.co.uk/roundup/autumn2018/