New ISA rules expand year-end tax planning options
New ISA rules expand year-end tax planning options
Mon 18 Jan 2016
On 1 February 2016 ISA changes announced in the first Budget of 2015 come into effect:
· replacement of cash withdrawn (“flexible accounts”);
· reinvestment of Help to Buy ISAs not applied in a house purchase.
Flexible accounts
Any sum withdrawn from a cash ISA may be reinvested in the same ISA or a replacement ISA and will not count as additional investments for the purposes of the annual investment limit (currently £15,240).
So if an investor who has already invested up to the maximum in ISAs (cash or shares) in 2015/16 has also made a withdrawal from a cash ISA they can also reintroduce the amount withdrawn to a cash ISA later in the year of withdrawal.
This applies to sums withdrawn voluntarily and to compulsory withdrawals made where the ISA is closed due to default by the scheme manager.
Reinvestment is permitted for voluntary withdrawals from any ISA except a Junior ISA (JISA) because a JISA is intended not to be touched until the minor for whom it was established has reached age 18.
Help to Buy ISAs
The regulations permit sums withdrawn from a Help to Buy ISA to be reinvested in a flexible ISA. This includes both:
· withdrawals from and closures of Help to Buy ISAs within their four-year growth period; and
· sums received when a Help to Buy ISA has passed its four-year time limit for use buying a first home and has not been used for that purpose.
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