I feel like this mustâve been covered before, but I searched for âISA withdrawalâ and couldnât find anything so I apologise to @Vedran in advance of him sending me a link to an existing topic!
Does Trading 212 support the withdrawal and reinvestment of funds from an ISA within the same tax year?
So, for an extreme example, if I have invested my full ISA allocation of ÂŁ20K with Trading 212 for the 2019/20 and 2020/21 tax years and that ÂŁ40K has grown to ÂŁ60K, can I withdraw the full ÂŁ60K, use it for something temporarily and return it to my Trading 212 account before 05/04/2021? I realise that Iâd need to sell the shares.
I hold other ISAs that support this and it is extremely useful for dealing with short-term financial issues.
If itâs not currently supported, is it on the roadmap?
HMRC does not allow funds to be withdrawn from an ISA and then later returned. If you put ÂŁ10,000 in an ISA, withdraw it and then return it, then it is as if you have put in ÂŁ20,000. The limit for the year is ÂŁ20,000 so no more may be put in.
Sorry, but thatâs definitely not true since Flexible ISAs were introduced. Iâve been doing it regularly with my other ISAs since their introduction.
Sorry, you are correct. I expect there must be some conditions on what is permitted. Does the flexibility only concern cash that has not yet been used to buy shares?
Itâs as flexible as you can possibly imagine. You can withdraw years and years worth of ISA allowance that has been invested in the stock market. You do need to sell the shares though.
Itâs a bit like Cinderella: the money has to be back before the end of the tax year that itâs withdrawn in, otherwise youâve lost the ability to shelter that money from tax for good!
Anyway no official reply on flexible ISA so, one could have to wait T212 to reply about roadmap or consideration. Only seen LISA/JISA topics getting official comments.
If itâs definitely not a Flexible ISA, and I need to withdraw some money temporarily, I could see myself performing an ISA transfer to a flexible ISA, withdrawing the money and then reversing the process so that my money ends up back with Trading 212.
I hope it doesnât come to that, but is there any reason why it wouldnât work?
If the money is from a past years ISA contributions, you can do a partial transfer. but if its the current years ISA then you have to transfer in full. even if you were to transfer to a flexible account, that would then become this years deposit on placing the money back causing you more complications in returning funds to an existing ISA.
Itâs a messy and time consuming way to handle things. Personally I would opt for making a savings account and storing enough money to cover your emergencies from there rather than try to withdraw ISA funds.
In my case, I paid cash in at the end of the 2019/20 tax year and then a few days later at the beginning off the 2020/21 tax year. I then started investing using the combined pool of cash, but I havenât invested it all yet. How could anybody say which shares/cash are âpast yearsâ and which are âcurrent yearsâ?
Iâm not sure what you mean. Can you elaborate please?
hard to get into specifics as I have only had the single ISA and no plans of switching. Itâll take quite a bit of research to get fully informed before I can give solid advice on it. usually though the transfer is done in respects to having 2 separate ISAâs, 1 with the old funds and another with the new.
the complications I mention is that you are basically going to perform 2 transfers in the same tax year between the same accounts, while also trying to use 1 for withdrawing and depositing old funds without affecting your current years contributions limit. I just canât see it going well as I try to reason with myself through all the necessary steps and time-frames (the time in which this occurs you would need to stop or switch the account receiving deposits for the current year to avoid a misstep that will have the HMRC contacting you)
Itâs a shame the ISA isnât Flexible. I found out Freetrade ISA is also not flexible. I had foolishly thought Trading212 would have a flexible ISA as they were ahead if Freetrade. It would make such a big difference if it was brought in. I am unlikely to add anymore money to my Isa account moving forward. I hope it is implemented soon or will move to other platforms that provide the service.
