News

Proplend’s IFISA Is Flexible

Published on April 12, 2017

With a flexible ISA you can take money out of your Proplend IFISA and put it back in before the end of the same tax year without it counting as a new ISA subscription. Funds from previous tax years can be withdrawn and deposited in this way along with current year subscriptions. To use this flexibility, you will probably need to sell some of your loan investments unless you have the required amount available in cash within your IFISA.

Below are a few example scenarios illustrating how flexible ISA withdrawals and deposits can work:

  1. You could withdraw £10,000 subscriptions on 9 July 2017 and add replacement subscriptions of up to £10,000 by 5 April 2018
  2. You could withdraw £10,000 subscriptions on 9 July 2017, add replacement subscriptions of £4,000 on 1 November and up to £6,000 as replacement subscriptions by 5 April 2018
  3. Balance permitting, you could withdraw £40,000 from your IFISA (previous year funds only) and return up to £40,000 to your ISA before 5 April 2018 without it being considered as new subscriptions.
  4. Balance permitting, you could withdraw current and previous year funds totalling £40,000 from your IFISA and return £25,678 before 5 April 2018. It is assumed that previous year ISA monies are returned (in full) first and the balance treated as replacement subscriptions.

However the following scenarios wouldn’t be treated purely as flexible withdrawals and deposits …

  • If you’d withdrawn £10,000 subscriptions from your ISA on 9 July 2017 and make a deposit of £10,000 after 5 April 2018, this would count as a £10,000 new subscription for the 2018-19 tax year
  • If you’d withdrawn £10,000 subscriptions from your ISA on 9 July 2017 and make a deposit of £11,000 before 5 April 2018, £1,000 will be treated as an entirely new subscription – £10,000 as a replacement subscription.
  • You can’t withdraw previous years’ ISA monies only if you have current year subscriptions in your IFISA. HMRC rules require us to assume that all current year subscriptions must be withdrawn from the flexible ISAs before any withdrawals can be treated as past year monies. 

As you can see, you can remove one amount from your Proplend IFISA and deposit a different amount. Any amount deposited over the amount withdrawn would count as new ISA subscriptions. If you don’t return the full amount withdrawn to the same flexible ISA within the same tax year – it will be treated as a permanent withdrawal from that ISA.

For more examples of how ISA flexibility works, read the ‘Flexible ISA Customer’ guide produced by TISA (Tax Incentivised Savings Association).


Net Subscriptions

If you withdraw current year subscriptions from your IFISA, the ‘net’ amount at the end of the current tax year (subscriptions paid in minus any subscriptions withdrawn) will be treated as the amount you subscribed. Net subscriptions is not just the total of all subscriptions in. The running total of subscriptions into our IFISA can never exceed the annual ISA allowance – even if you intend to make a withdrawal which would bring net subscriptions back to the amount allowable by the end of the tax year.

Example scenario – If you withdraw all subscriptions you’ve made to an IFISA in the year they were subscribed but don’t replace them in that same tax year, your net subscriptions reported to this ISA will be nil. It will still be considered that you have ‘subscribed’ to your one IFISA for the year though, so you won’t be able to subscribe to another IFISA this tax year. You may still have scope to subscribe to one of the other ISA types you are yet to subscribe to in that tax year.

We will keep you updated with the running total of net subscriptions you’ve made to your Proplend IFISA (including any current year subscriptions that have been transferred to us by other providers). We will never let you subscibe more than the full ISA allowance in any given tax year to our IFISA alone but only you will know where else you have subscribed.

It’s your responsibility to keep track of what you have subscribed to all your ISAs in any one tax year and how many ISAs of each type you’ve subscribed to in that tax year. If you exceed your annual subscription allowance or exceed the number of ISAs of one type you could subscribe to in one year this will need to be remedied. Your ISA provider(s) may charge you a fee for the extra admin required to repair or even ‘void’ your ISA.

Flexible withdrawals from an ISA should not be confused with ISA ‘transfers’. For one thing, transferring all current year subscriptions within an ISA preserves your right to invest subscriptions in another ISA of the same type. ‘Withdrawing’ subscriptions and reinvesting them yourself with another ISA of the same type would not be permitted.

Caution – Never withdraw funds from your ISA that you intend to ‘transfer’ to another provider and never try to rectify breaches of ISA limits yourself. Your ISA providers will take the appropriate action on your behalf based on HMRC guidance.