Stocks and Shares ISA and taking out/putting in cash

[Z064life]

Hi

I have a stocks and shares ISA with 14k in it. I am looking to take out this money (13k of it) to fund a car purchase.


If I do this, I'd like to obviously put in 13k again into the ISA. Is there any limitations in doing this i.e. with tax/tax years? I plan to do this around March next year.


Thanks

[Ginge R]

The £14,000 that you currently have, was all of that (or some of it) invested in the current financial year? If so, taking money out of this year's account doesn’t reset your tax-free ISA allowance. For instance, if you save up to your entire ISA allowance then withdraw some money, you can’t put that part (that you withdrew) back into your ISA in this tax year.

[Z064life]

Ginge R said:

The £14,000 that you currently have, was all of that (or some of it) invested in the current financial year? If so, taking money out of this year's account doesn’t reset your tax-free ISA allowance. For instance, if you save up to your entire ISA allowance then withdraw some money, you can’t put that part (that you withdrew) back into your ISA in this tax year.

The money was invested a few years ago, can't remember if one lump sum or several now. So really the best thing to do is take out the 13k before April next year, and then start investing the money back after April (next fiscal year)?

[Ginge R]

You can do that, yes - I don't know if it's the best thing to do. But in essence, the time frame of your existing investments does mean that you can sell them and then save/invest again within an ISA wrapper in this tax year, yes.

[Z064life]

Thanks. When you say it's not the best thing to do on what grounds do you mean?

[Ginge R]

Sorry, only on the grounds I don't properly know your circumstances - a professional caveat/cop-out.

[Ozzie Osmond]

Sounds fair enough. IIRC the annual investment allowance for ISAs is currently £15,000 so OP can use future allowances to top up your ISA investments as and when. It seems unlikely you are withdrawing and trying to reinvest in the same year. However, if you have only a temporary cash shortage it might be worth considering a short term bank loan rather than disinvesting from ISA which may result in trading costs as well as loss of the valuable tax privileges.