stub8535
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Post by stub8535 on Jan 5, 2017 21:40:51 GMT
I was recently advised that all cash isa's are flexible by an advisor at a bank with a black horse. Doesnt sound right to me.
I am interested in parking money in Isa's atm both sides of the tax year 2017. I want to keep the choice of types open till lisa, ifisa etc start to come out and have bugs ironed out.
My intention is to fill both years in 4 names from a legacy. I then intend to draw the cash out under flexibility rules, invest in p2p, replace funds just before end of tax year as per the flexibility in order to get a better return.
I asked the question of 2 banks today about this being ok over 2 tax years Isa allowances and neither gave a convincing answer. On thinking about it further I find more complexity, which i have e mailed hmrc about.
Example
2015/16 and 2016/17 fully funded £15240 each total £30,480.
Scenario 1 Draw less than £15240 and replace it all on time. Assume all ok. Isa covers all.
Scenario 2 Draw £20240 and
1 replace all. Can this be done or can one only replace this years money to 15240.
2 replace £5000 which isa year does the money go into first? Can one tell the bank what needs to go where and are they set up to do it on internal systems?
What happens if I have not filled the current year? Do banks assume new money is just that and use it as new deposits rather than replacements thus reducing effective allowance?
Anyone see any more complexities than mentioned here?
I will post updates from hmrc as I get them where applicable.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jan 5, 2017 21:50:41 GMT
I was recently advised that all cash isa's are flexible by an advisor at a bank with a black horse. Doesnt sound right to me. I am interested in parking money in Isa's atm both sides of the tax year 2017. I want to keep the choice of types open till lisa, ifisa etc start to come out and have bugs ironed out. My intention is to fill both years in 4 names from a legacy. I then intend to draw the cash out under flexibility rules, invest in p2p, replace funds just before end of tax year as per the flexibility in order to get a better return. I asked the question of 2 banks today about this being ok over 2 tax years Isa allowances and neither gave a convincing answer. On thinking about it further I find more complexity, which i have e mailed hmrc about. Example 2015/16 and 2016/17 fully funded £15240 each total £30,480. Scenario 1 Draw less than £15240 and replace it all on time. Assume all ok. Isa covers all. Scenario 2 Draw £20240 and 1 replace all. Can this be done or can one only replace this years money to 15240. 2 replace £5000 which isa year does the money go into first? Can one tell the bank what needs to go where and are they set up to do it on internal systems? What happens if I have not filled the current year? Do banks assume new money is just that and use it as new deposits rather than replacements thus reducing effective allowance? Anyone see any more complexities than mentioned here? I will post updates from hmrc as I get them where applicable. No, all ISA arent flexible. Banks have the option to offer flexibility and quite a major ones dont There is a thread discussing this somewhere with erudite contributions from james among others on the exact details of the rules You can withdraw and replace previous & existing year subscriptions but it has to be back to the same ISA. There is a strict order in which banks are required to treat withdrawals with credits going towards previous year subscribptions first see HMRC Guidance notes 6.77 onwards. (Potentially there are some complexities relating to current year money but if you keep it simple just moving money in & out of the same place then wont be relevant) HMRC GuidanceEdit I should add that from personal experience most in branch staff (and some dedicated HO ISA staff) dont have a clue about anything other than their own product, even ISA rules (try explaining Innovative Finance ISA) Ive being doing what you propose most ot the year
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stub8535
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Post by stub8535 on Jan 5, 2017 22:22:31 GMT
Thanks for the quick answer ilmoro. Great bedtime reading!😀
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james
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Post by james on Jan 6, 2017 4:38:54 GMT
For cash or S&S ISAs that offer the flexible withdrawing feature you can withdraw any amount, a million Pounds if you have that much, and can replace it within the same tax year to the one you withdrew from.
Current year money is withdrawn first and replaced last, per the regulations.
For quick and reliable descriptions of how ISAs work read the Wikipedia and MSE articles. Both are accurate and the references linked at Wikipedia often include the specific relevant wording from the regulations quoted to you if you click on the reference number. You do often have to open partially hidden text to get really precise details at MSE but they, including ML himself, have been responsive to contacts with correction and clarification suggestions when I've made them.
Bank staff are normally trained only on the products of their employer and you should always use caution in reading things beyond that since a particular employee may not know the full rules on products offered by others. A particularly common mistake is to say you can have only one cash ISA account with current year money. The actual rule is current year money with only one cash ISA provider at a time, not one account.
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stub8535
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Post by stub8535 on Jan 28, 2017 12:57:37 GMT
James. Thanks for this. It tallies with my pre meeting understanding. Can I ask if the rules allow s&s and ifisa to be flexible? How does the cash isa provider know how much alliwance someone has left if all three are with a different company?
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james
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Post by james on Jan 28, 2017 13:02:25 GMT
Yes, those two can be flexible.
The providers are only expected to check the money they have. HMRC gets reports from them all and combines them to catch breaches of the rules.
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stevio
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Post by stevio on Jan 28, 2017 15:47:02 GMT
I phoned 3 major ISA providers to check if their ISAs were 'flexible' and not one of them had a clue, they didn't even understand the concept
I eventually found and confirmed the info myself on their websites. The black horse one had it hidden away, but did confirm it exactly. That particular one is quite good as when you withdraw, it keeps a tally of what you can put back plus this year's allowance, which is handy
The only pain is selling your P2P, then reinvesting
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ilmoro
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Post by ilmoro on Jan 28, 2017 16:15:49 GMT
I phoned 3 major ISA providers to check if their ISAs were 'flexible' and not one of them had a clue, they didn't even understand the concept I eventually found and confirmed the info myself on their websites. The black horse one had it hidden away, but did confirm it exactly. That particular one is quite good as when you withdraw, it keeps a tally of what you can put back plus this year's allowance, which is handy The only pain is selling your P2P, then reinvesting The one that covers the whole country does the same (though they have no idea what p2p or ifisa are), the three letter one doesnt specifically say how much youve removed but just adds it to your annual subscription limit.
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stevio
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Post by stevio on Jan 28, 2017 16:20:17 GMT
I phoned 3 major ISA providers to check if their ISAs were 'flexible' and not one of them had a clue, they didn't even understand the concept I eventually found and confirmed the info myself on their websites. The black horse one had it hidden away, but did confirm it exactly. That particular one is quite good as when you withdraw, it keeps a tally of what you can put back plus this year's allowance, which is handy The only pain is selling your P2P, then reinvesting The one that covers the whole country does the same (though they have no idea what p2p or ifisa are), the three letter one doesnt specifically say how much youve removed but just adds it to your annual subscription limit. I think we have been so used to anonymizing!!   We are allowed to say bank/building society names aren't we? (or is it just more fun this way  - we'll be making up words for the acronyms next!)
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stub8535
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Post by stub8535 on Jan 28, 2017 21:33:19 GMT
Stevio raises a good point. Selling p2p is easy in some places but getting your money reinvested could take a long time. For some platforms you probably cannot liquidate holdings fast enough or send cash to your ISA without it going through your bank account. Times to transfer from p2p vary as does to time to move between bank account and ISA.
It is going to be even harder to reinvest the IFISA money after 6.5.17 as there will be the new £20k allowances being thrown in too. There is plenty of moaning about bm cash drag now. I think we ain't seen nothing yet. Other sites will be the same unless they look for more risky borrowers/ projects or reduce interest.
Maybe best to fill high interest bank accounts and wait a couple of months then drip feed back in.
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james
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Post by james on Jan 29, 2017 7:45:25 GMT
Useful alternatives for some can be overdraft or credit card cash advance use. Not free but maybe cheaper for a week or two than being uninvested for longer. I'll certainly be doing some of this myself, overdraft particularly since my arrangements are fairly cheap, much around P2P interest rate.
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stub8535
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Post by stub8535 on Jan 29, 2017 9:48:59 GMT
Good idea James. Only a couple of days interest plus fees. Even used in part it would reduce the selling level. I might also ask z or r for a cheap loan. Wonder if collateral would lend against a self managed portfolio?
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- we'll be making up words for the acronyms next!)