“Flexible” ISAs

Under the current rules, if an investor wants to withdraw funds from an ISA and then replace those funds, this will count as an additional ISA investment, which could exceed the year’s allowance.

However, with effect from 6 April, managers of ISAs (but not Junior ISAs) will be able to allow the reinvestment to be regarded as simply replacing the amount withdrawn.

The rules are complicated, and provide that for savers with more than one year’s ISA, withdrawals will be set first against the current year’s subscriptions; and if the amount withdrawn exceeds the amount subscribed in the current tax year, the excess will be treated as a withdrawal from previous years’ subscriptions. Clearly an area requiring qualified advice!