Flexible ISA Internal Transfer Limits?

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1

Hi all,

Hoping for some reassurance Iā€™m not exploiting some loophole here.

For the sake of clarity, Iā€™ll be using inflated numbers, but the point is Iā€™m dealing with more than Ā£20,000 - i.e. multiple yearsā€™ worth of subscription/deposits. All of the examples I can find online are quantities under Ā£20,000.

Letā€™s say I withdraw Ā£60,000 built up over 3 years from my UK Cash ISA, I can redeposit that Ā£60,000 into the Cash ISA in the same tax year without impacting my allowance.

Based on Can I move funds between the accounts? ā€“ Trading 212, I can also use Trading 212ā€™s ā€˜transfer fundsā€™ ā†’ ā€˜move fundsā€™ feature to move the Ā£60,000 from my Cash ISA into my S&S ISA without impacting my allowance:

Will transferring funds impact my ISA allowance?

In case you transfer funds between two ISA accounts - i.e. between your Cash ISA and S&S ISA - it will not be affected.

My question is whether this applies to profit/interest gained in any given tax year. Letā€™s say I move the Ā£60,000 from my Cash ISA to my S&S ISA, invest it and make Ā£30,000 profit, can I use the transfer feature to move Ā£90,000 back into the Cash ISA?

These are very inflated numbers but Iā€™ve essentially achieved this, and now concerned about a knock on the door from the tax man!

Many thanks.

2

All money inside an ISA wrapper is free of UK tax, be that a Cash ISA or a SS ISA. That means all money deposited or invested and all income taken out, interest earned, capital gains and dividend payments are free of UK tax.

In the case of dividends paid on assets not domiciled in the UK there may be a withholding tax applied depending on what tax treaties apply but no direct UK taxation will apply.

You can move money around via ISA transfer any which way you choose without tax penalty, since the money involved never leaves the tax free wrapper. The only limiting factor is whatever terms and conditions the provider(s) you use to transfer can actually offer.

edit - to be clear any withdrawals from an ISA wrapper cannot be deposited back into an ISA wrapper without affecting your allowance which would be Ā£20K max in this tax year (and the same next year)
UNLESS the money is held in a FLEXIBLE ISA which allows any amount of money taken out of the FLEXIBLE ISA to be redeposited within the same tax year. As is the case with T212.