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ISA withdrawal guidance and information
Individual Savings Accounts (ISAs) are a great tool for investing your money in a tax-efficient way. Ideally, for a long-term period of at least three years.
However, when the time comes to withdraw your investments, you’ll need to be aware of how it could affect your tax benefits.
With most non-fixed term ISAs, you should be able to take this money out whenever you want to. However, you will need to keep an eye on any terms and conditions. Here we look at how you can make an ISA withdrawal, how the process works, and how long it takes.
Are you allowed to take money out of an ISA?
In simple terms, yes. You are allowed to take money out of your ISA. The money invested in an ISA belongs to you, and you can make an ISA withdrawal if you need to. This means you can take the money out of an ISA and you’re free to use it as you want.
For a Junior ISA (JISA), the money belongs to the child named on the account and withdrawals can only take place once that child turns 18, or if there are exceptional circumstances. Unless you decide to transfer providers, the money stays in one place until your child becomes an adult and has full access to the account.
Can ISA withdrawals affect your annual tax-free allowance?
Depending on the type of ISA you have, withdrawals can affect your tax year allowance.
Every tax year, adults in the UK have their own ISA allowance. This allowance is the limit to how much money you can put into an ISA without it being taxed. For 2023/24 The ISA allowance for adults is £20,000, and for JISAs it’s £9,000.
If you have a non-flexible ISA, such as a Lifetime ISA (LISA), every payment you make into the account will count towards your tax-free allowance. This applies to money you take out and pay back in again. This means that if you plan to take out money from a non-flexible ISA account and put it back in regularly you might reach the limit quickly.
For example, you need to pay to have your car repaired urgently. It will cost £500. You just recently paid £500 into a non-flexible ISA account last month. If you decide to take the £500 out from your non-flexible ISA, with plans to pay the money back later, this will count as £1000 of your annual ISA allowance.
If you have a flexible ISA, like a stocks and shares account, you can withdraw and deposit your money without it affecting your annual allowance.
Using the same example mentioned, if you choose to take the £500 out of a flexible ISA and pay it back in later, this will only count as £500 of your allowance.
Is there a withdrawal fee?
If you have money invested in a stocks and shares ISA, there may be a fee for withdrawing your money, depending on your provider.
However, if you have a John Lewis Investments Stocks and Shares ISA, we won’t charge anything for withdrawals. That being said, this is subject to the terms and conditions of our partner, Nutmeg.
How do you withdraw money from an ISA?
If you want to make an ISA withdrawal, first check the terms and conditions of the account. If you have an ISA with another provider, make sure you check with your provider to see if you’re allowed to make the withdrawal without penalty.
If you're withdrawing from a non-flexible ISA, remember that any allowance used in this tax year will remain used, and you won’t get this allowance back if you pay more into your ISA at a later date.
What happens when you make a withdrawal?
After requesting a withdrawal from your provider, they will then transfer the money to you. If you have a stocks and shares ISA, this will be after your investments are sold, so it can take a few days.
How long does it take to withdraw your money?
If you’re taking money out of a stocks and shares ISA, it usually takes between 3 and 7 days for you to receive the money.
In some cases, this can take longer as your provider needs to sell your investments before it can transfer the money to you. If this is the case, they should let you know how long it will roughly take.
Can you transfer money between ISAs?
If you decide to switch your ISA to a different provider, you can transfer your money between the two accounts if the new ISA provider allows transfers.
If you’re planning on transferring your ISA funds from another provider into a John Lewis ISA account, you can read about how we manage ISA transfers. If you transfer an ISA, make sure to use the transfer service offered by your provider. If you withdraw the money yourself, it may impact your annual allowance.
We can handle the transfer for you, just make sure to let us know when you sign up for an account with us.
John Lewis plc trading as John Lewis Finance acts as an Appointed Representative of Nutmeg Saving and Investment Ltd for the purpose of making introductions to Nutmeg and distributing financial promotions. John Lewis Investments services are provided by Nutmeg Saving and Investment Limited; authorised and regulated by the Financial Conduct Authority, no. 552016, registered in England and Wales, no. 07503666, with a registered office at 25 Bank Street, Canary Wharf, London E14 5JP.