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Flexible ISAs 

The Government changed the rules for ISAs from 6 April 2016, giving providers the option to make ISAs flexible.

How is a flexible ISA different?

With a flexible ISA, you’ll be able to withdraw money and then replace it before the end of the tax year (if your provider allows) without affecting your ISA allowance. This will not apply to Junior Cash ISAs or Help to Buy ISAs.

An ISA which isn't flexible doesn’t give you this option. Say, for example, you paid £10,000 into a Cash ISA on 6 April 2016 and withdrew £7,000 to buy a new car on 15 June 2016. The current annual ISA allowance is £15,240, so you’d only have been able to put £5,240 back into your ISA until the new tax year on 6 April 2017.

If you pay £10,000 into a flexible Cash ISA and withdraw £7,000, you can put the full £7,000 back into the ISA – plus a further £5,240 to take you up to your £15,240 annual allowance. You just have to make sure all the payments are put back into the same account and in the same tax year as the withdrawal.

Will all ISAs be flexible?

Each provider will decide whether or not to provide flexible ISAs and on what terms. All our variable easy access Cash ISAs are flexible.

A flexible ISA gives you chance to use your savings rather than lose part of your allowance.

There are lots of reasons you might need to dip into your savings temporarily. You might, for example, want to pay for a holiday before a bonus payment from work clears. Or help a family member with a short-term loan.

By allowing ISAs to be flexible, the Government has made it easier for you to keep your tax benefits while using your savings.

Each year, you’re allowed to pay a certain amount of money into a Cash ISA, a Stocks and Shares ISA, an Innovative Finance ISA or a combination of the three. The allowance for the 2016/2017 tax year is £15,240.

It’s up to you how you split your £15,240 allowance across Cash ISAs, Stocks and Shares ISAs and Innovative Finance ISAs as long as you don’t go over that amount in total.

If you withdraw funds from a flexible ISA in March for example, and then don’t pay them back in until 6 April or later, when the new tax year has begun, you will lose the tax benefit of the flexibility.

Your ISA allowance doesn’t roll over each year if unused. So any funds you return to your ISA once the new tax year has begun count towards that year’s allowance, not the previous one.

We’ll tell you when you open an ISA if it’s flexible.

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