What is a Flexible ISA?
Simply put, the Flexible ISA feature provides the ability to withdraw and replace money in your ISA. As with all tax-related products, there are rules that must be followed:
The feature only covers cash withdrawals, but does include sale proceeds and dividend withdrawals.
Money can only be replaced within the same tax year that it was withdrawn.
Replacement payments won’t count towards your annual subscription limit (unless you pay in more than previously withdrawn).
The feature can be applied to both old and new ISAs.
Can I access my money at any time?
VIDEO Making replacement payments
Where they offer the Flexible ISA feature, ISA providers can choose which accounts you can make replacement payments into. If you are withdrawing money from an old ISA, it is likely that you will only be able make a replacement payment into that same account. The repayment does not count towards your annual subscription, so you are allowed to make repayments to as many ISAs as you have withdrawn from, and you will not be asked to complete a new application.
However, where you have subscribed some or all of your £15,240 allowance in the current tax year to a Flexible ISA and you withdraw any part of that subscription, you will be able to use that amount again – either to re-subscribe to the Flexible ISA, or to subscribe to a Cash ISA or a new Innovative Finance ISA.
An example of how a Flexible ISA works
If you subscribe £10,000 to a
Stocks & Shares ISA with the Flexible facility, you will have a further £5,240 available subscription remaining. Should you withdraw £4,000 from that ISA, your recorded subscriptions with that ISA provider will reduce by £4,000. This means you will have an available subscription of £9,240, which you can pay back into the same Stocks & Share ISA, or split between that Stocks & Shares ISA, a Cash ISA and a new Innovative Finance ISA.
Please remember that you cannot make current year subscriptions to more than one ISA of each type in any one tax year, so the available subscription can only be paid to the ISA it was withdrawn from or to an ISA of a different type.
Transferring to another ISA provider
The Flexible ISA facility is not transferrable. That means if you have withdrawn money but not replaced it, you won’t be able to make the repayment with your new provider.
The Share Centre will be offering Flexible ISAs
The good news is The Share Centre has added this facility to all adult ISAs under our management. There's no need to opt in; you will be able to start using the Flexible ISA facility with us from 6 April 2016. Not all ISA providers offer a Flexible ISA facility, so the current rules around withdrawals will still apply to them. If your ISA provider doesn't offer a Flexible facility, transfer your accounts to us!
If you do decide to transfer to us, please note it can take up to four weeks to process your transfer and you won't be able to deal whilst it's going through. Since the value of investments can fall as well as rise, please bear in mind that you may incur a loss of income and / or growth whilst the transaction is being completed.