Isa Withdrawals and Transfers


Back to ISA's.

You will have to wait until April 6th to pay back in the £800 and when you do pay it back in you will only have £2800 left to invest for that next 12 months. So in effect you have actually reduced your Tax Free Cash investment by £1000 over a 24 month period.
If you think that you will need to withdraw money from your savings throughout the year, it might be a better idea to take money from another savings account rather than your ISA if this is at all possible.

The same situation would apply if you decided that you wanted to move your ISA provider and to do this you decided to withdraw the money from your current ISA account, close it and then open another account with another provider. When your new ISA provider went to set up your new account it would show how much of that years allowance you had already used and you might not actually be able to pay in what was originally invested.

For example, you have an ISA with provider 'A' in which you have paid in £900 in the last 12 months, and already have £2700 from previous years. You decide to close this account and withdraw a total of £3600. You think that as this was already in an ISA, you can just pay it into Provider 'B's' ISA, especially as you have not exceeded the maximum investment amount allowed in 1 year of £3600.
However, when you go to Provider 'B' and discuss where the money has come from, they go to open your ISA and explain to you that actually for the remainder of this ISA tax year you can only pay in £2700. This is because you have actually already used £900 of this years allowance and although you already had all this money in an ISA it was from previous years investments and that can not be withdrawn and reinvested. What you should have done is talk to Provider 'B' in advance and explained the situation as they may have been able to do a ISA transfer, for which you may have been charged, but would put you in the same investment position with them as you would have been with Provider 'A'. You will now have to wait until the 6th April to be able to pay in the remaining £900 and you will only have an additional £2700 available for investment in that year too.

Any allowance you don't use in a 12 month period is not carried over to the following year. You are only allowed to pay in Cash of £3600 per year, irrelevant of how much allowance you had left last year, and irrelevant of how much money you have withdrawn.

Back to ISA's.


Puzzle Corner