ISAs – Increased Flexibility
From a general information perspective, we are keen to let everyone know about a couple of rule changes that apply to ISA accounts in the UK. Once you have digested the contents, do please get in touch if you want to review how things apply to you personally.
ISA investors are now allowed to withdraw money from their ISA pot and then replace anything up to this amount back into their ISA – provided they replace the money within the same tax year (and provided the ISA plan manager allows it). This is in addition to the current annual maximum subscription of £15,240. Incidentally, from 6 April 2017, the maximum amount that you can contribute to an ISA increases to £20,000.
For example, we have had a client this tax year who withdrew funds to help buy a new house, before they had received the proceeds of their existing property sale. Soon afterwards the sale proceeds came in and they were able to reinvest a considerable sum of money into their ISA account.
On a related matter, HMRC has now clarified that any adviser fees that are withdrawn on a monthly basis from ISA accounts, count as withdrawals under the new flexibility rules, and so this amount could also be paid in by an investor, in accordance with the rules outlined above.
This means that even if you have already contributed £15,240 in the current tax year, there is an additional amount that can be contributed.
As a consequence, if you want to top up your ISA to the absolute maximum, including the extra amount reflecting the adviser fees withdrawn, please get in touch with us before the end of March this year (and in future years too) and we can calculate the maximum figure permitted for your account.