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18. Withdrawing funds from an ISA

You can withdraw funds from your ISA account at any time without losing tax relief. So, if you have shares or bonds in an ISA, and you need some money to spend, you can sell them to realise cash and there will be no penalty.

But if the cash crisis passes and you suddenly find yourself with more than you need, you can't casually return investments to the ISA unless you have at least equivalent unused annual allowances.

An  Example

On the other hand, if you had invested only £6,200 in the tax year and subsequently withdrawn £1,000, you would have been able to put the £1,000 back later, because you would still have had £1,000 of your allowance remaining. The same will hold for the larger ISA allowances coming in for over-50s in October 2009, and everyone else in April 2010. An initial investment of £10,200 would prevent money being returned; anything lower would not, so long as the amount returning was not greater than the amount not yet invested.

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