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Oct 2020

Flexible ISAs: What You Need to Know

Flexible ISAs: What You Need to Know

ISAs are a great way to put money aside while keeping it safe from the tax man’s hands; every British citizen is entitled to a yearly allowance of £20,000 to keep in these tax-efficient ISA accounts. But with quite a few having strict terms, how flexible can ISAs be? We’ve put together a blog on what you need to know about Flexible ISAs, to answer your pressing questions. 

What is a flexible ISA?

A flexible ISA is a modification of an ISA; it was originally initiated as a policy on the 6th April 2016 (so the beginning of that tax year).

This modification allows for the introduction and application of flexible features onto an ISA account while keeping the benefits of a traditional ISA; and these can be applied to an ISA account whether it was opened before or after 06/04/16.

It gives various advantages to people who opt for this form of ISA – especially when it comes to having access to your money.

The flexible ISA allows for an individual to withdraw money without any limit from the account. The money can be deposited at irregular intervals without any limit on the deposit.

What are the limits?

While this is a great option for an ISA, there are some limitations. These include:

  1. This it is not carried by all providers that offer ISAs.
  2. The money deposited to replace that which was withdrawn will not add up to or contribute to that of the annual subscription.
  3. The only instance where that is possible is when the money deposited for the repayments exceeds that which was withdrawn, within the same tax year.
  4. The money that is withdrawn from the account, though without a limit on withdrawal has to be repaid within the same tax year as that which it was withdrawn.
  5. A flexible ISA account is not transferrable from one credit institution to another. For that reason, if the money that was withdrawn on a certain account is not repaid before opening another account, the money cannot be repaid into the new account.
  6. In the event of a transfer, the new credit institution is not informed about the funds to be paid. Instead, the information passed on concerns the value of money that is left within the account, and that which is accessible for withdrawal.
  7. The flexible ISA feature only works for withdrawals and not deposits.

What are the benefits?

Having looked at the limitations, it’s important to address the benefits to – the reasons why you should consider a flexible ISA account:

  1. A flexible ISA allows for an individual to use the money that they have saved instead of their allowance on the account.
  2. The unlimited withdrawal is very beneficial to individuals especially concerning situations of emergency.
  3. By using flexible ISA, an individual retains his/her tax benefits and is still able to use their savings.

How do I get one?

The flexible ISA is only accessible to credit institutions that have agreed on it.

You need to make sure your chosen ISA provider supports this, if this is the ISA type you want.

Our page on Flexible ISAs contains links to providers who currently support this – so you can read more about this here. 

Important Risk Information:

The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website aims to provide information to help you make your own informed decisions. It does not provide personal advice based on your circumstances. If you are unsure of how suitable an investment is for you, please seek personal advice.

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