Hello All,
I have not used any of my ISA allowance for this year, still have the full £20k remaining. I intend to utilise my full allowance towards the end of the tax year when a fixed rate savings account matures external to T212. In the meantime i have £7k i want to park to earn something tax free and take the profit.
So imagine i put the £7k into my S&S ISA, invested in say an S&P500 fund and made £1000 in gain by the time i wanted to withdraw (lets say 1st April for arguments sake).
Can anyone explain to me what happens to my allowance if i pull out £8000 when i only put £7000 in? Do i go into negative allowance? Would i then need to put in £21,000 to fully utilise my 2026-2027 allowance?
Supposing i did this on a bigger scale - say over time i had put in £100,000 in capital and made £80,000 in gains - if i withdraw just the gains would that affect my current year allowance?
This is probably a really simple answer so apologies if this is a dumb question
There are no restrictions or tax implications on withdrawing money from an ISA. The only restriction is in the net amount you put in.
I dont fully understand ‘Net amount you put in’ can you give some examples please?
Examples from me:
Put £20,000 capital in, withdraw £1,000 (gain only) can i then put in a further £1,000?
Put £6,000 capital in, withdraw £3,000 (£2,000 capital, £1,000 gain) can i then put £3,000 back in or just the £2,000?
Put in £40,000 capital in (over two tax years inc. £20,000 this year), withdraw £50,000 (£25,000 capital, £25,000 gain) what will T212 allow me to put back in this tax year?
I guess I’m mulling over how T212 knows if a withdrawal is capital or gain.
You are allowed to put a net amount of 20K per year into an ISA, for the time being at least. For example, you can put in 14K, then draw out 10K so at that point the net amount you have put in is 4K.
That net amount must never exceed 20K in any one tax year. You can put in 30K as long as you take out 10K but the net amount must never at any point exceed 20K.
I would hope there will be people here who can answer with more authority than me, but I would have thought the 30k example is a recipe for trouble. If I’m not mistaken you can’t put more than the allowance into all of your ISA’s and then just take the excess out before the end of the tax year. HMRC will come after you for the interest/ profit earned off the excess amount.
As for your examples, they require that all happens in the same tax year and that the ISA is flexible. Then if you put 20k in, take 1k out, you can put that 1k back in again.
Number 2, you put 6k in and take 3k out, you’ve used 3k of your allowance and can put another 17k in.
Third, you’ve used your allowance over two years, the 40k and all gains are inside the tax wrapper. You take 50k out of the wrapper, you can put 50k back in.
What happens in the ISA stays in the ISA, no matter if it’s paid in funds or gains. By HMRC they’re treated the same.