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're 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 doesn't apply to Junior Cash ISAs, Help to Buy ISAs or Lifetime 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 2017 and withdrew £7,000 to buy a new car on 15 June 2017. The current annual ISA allowance is £20,000, so you’d only have been able to put £10,000 into your ISA until the new tax year on 6 April 2018.
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 £10,000 to take you up to your £20,000 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.