Can I reinvest money I've withdrawn from my ISA?
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I have a number of ISAs including some Cash ISAs that I opened a few years ago. I’ve already used my ISA allowance this year to invest in a Stocks & Shares ISA. My daughter is getting married later this year so I’d like to draw some money out of my old Cash ISA to help pay for the wedding. I expect to have enough surplus income to be able to put it back again before the end of the tax year but won’t have any ISA allowance left. Can I put back what I’ve taken out?
Richard Barker of Smith & Pinching responds:
Whether or not you will be able to reinvest the amount you plan to take out of your ISA will depend on the ISA account from which you draw the money. It is possible under ISA rules but the ISA account must be a flexible one that has the facility – and not all ISAs do.
Under the rules, if you have a flexible ISA, you can withdraw money from the account and put it back in without affecting the current year’s ISA allowance, provided you withdraw and pay back within the same tax year and into the same ISA account.
Both Cash and Stocks & Shares ISAs can be flexible: you will need to check with your ISA provider(s) if any of your accounts are set up to allow flexible withdrawals. If you don’t have any that offer flexibility, you may wish to transfer your ISA savings over to an account that does, although you should be careful that you don’t suffer any kind of penalty or fee, such as by withdrawing early with a fixed term plan, that might cancel out any benefit of putting the money back into an ISA wrapper. Remember, however, that if you want to move money between ISAs, you must use an ISA transfer: if you just take it out to put into a new ISA, it will count as a new investment.
I suggest you get independent financial advice about your ISA portfolio to ensure that you are getting the maximum benefit from the money you have already invested and that you are able to use your money as and when you need it.
Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.
For more information, please visit www.smith-pinching.co.uk
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