ISA withdrawal question

[RichS]

Hello all,

If I put cash into my stocks and shares ISA now, can I withdraw it next tax year and then put it back into the 2015/16 ISA? Or if I take it out in say June and then put it back in, does that count as a contribution to the 2016/17 ISA? Thanks! Hope that makes sense.

[sidicks]

RichS said:

Hello all,

If I put cash into my stocks and shares ISA now, can I withdraw it next tax year and then put it back into the 2015/16 ISA? Or if I take it out in say June and then put it back in, does that count as a contribution to the 2016/17 ISA? Thanks! Hope that makes sense.

Once you've taken money out, anything paid back in counts towards the contribution limit for that year.

AIUI.

[RichS]

Thanks- so even if I put it in now, it'll be classed as a contribution for next year if I take it out next year? That's a bit rubbish.

[anonymous-user]

RichS said:

Thanks- so even if I put it in now, it'll be classed as a contribution for next year if I take it out next year? That's a bit rubbish.

You can only ever put into the current year. Once you've reached your limit for the year you can add no more - even if you withdraw the lot and want to replace it later.

[Ginge R]

Currently, you cannot replace money removed from an ISA. In last year's budget though, secondary legislation was announced relating to the withdrawing and replacing money from one. The changes will take place from April of this year.

https://www.gov.uk/government/publications/individ...

[Ozzie Osmond]

RichS said:

That's a bit rubbish.

Why?

If you don't like tax relief nobody is telling you you've got to have it!

[Jockman]

Ginge R said:

Currently, you cannot replace money removed from an ISA. In last year's budget though, secondary legislation was announced relating to the withdrawing and replacing money from one. The changes will take place from April of this year.

https://www.gov.uk/government/publications/individ...

Yeah, I remember thinking 'about time' when this was announced. Gradually the silly conditions are being relaxed around ISAs, including the conversion of cash to S&S and vice versa.

[Ginge R]

We have so many different types of bloody ISAs now, so much for simplicity..

Edit: Ironically, the ISA labelled as 'Lifetime'.. isn't!

Edited by Ginge R on Sunday 20th March 15:32

[Ozzie Osmond]

Ginge R said:

We have so many different types of bloody ISAs now, so much for simplicity...

And perversely with,

• an annual CGT allowance of £11,100
• most savers paying no tax at all on their savings income, and
• base rate CGT at only 10%

the actual attraction of ISA is much smaller than it was when the concept was first introduced.

Essentially for most people the big ISA benefits only arrive if/when the government is putting 25% into a new Lifetime ISA.

[RichS]

Ozzie Osmond said:

Why?

If you don't like tax relief nobody is telling you you've got to have it!

Well quite, but what annoys me is that if I contribute in year 1, then take it out in year 2, if I put it back it goes against year 2's allowance. That's illogical I think. I shouldn't be penalised by having my allowance reduced in year 2.

But totally agree that it's better than a kick in the teeth. My retirement plan is pension plus ISA. Max out the pension now while I can, and also put cash into the ISA. Then take the pension income in retirement at the lower tax rate, and top up with ISA income that's tax free.

[RichS]

Ooh and also stick some cash into the new Retirement ISA in my wife's name (who's under 40) instead of mine (who isn't!)

[Ozzie Osmond]

RichS said:

My retirement plan is pension plus ISA. Max out the pension now while I can, and also put cash into the ISA. Then take the pension income in retirement at the lower tax rate, and top up with ISA income that's tax free.

^^^^ This, this and this.

People who are awake and paying attention should be able to achieve a very good income in retirement at a low average tax rate, say 10%. Especially where the partner's allowances are used as well.

[Ginge R]

Fifteen years ago, I was awarded a war disability pension. The benefits of said MoD pension woke me up to tax as something that could help as well as hinder, and the idea that it isn't what you make that's important, it's what you keep.

Oh, and free prescriptions and Oyster card..