What is a flexible ISA?

Written by
Fact checked by
Adam N.
Apr 2024

The flexibility of an Individual Savings Account (ISA) refers to whether you are able to withdraw money in a tax year from your ISA without affecting your annual allowance, which in the 2023/2023 tax year is £20,000.

If a cash ISA is flexible, it means you can withdraw money from it and put the money back into it within the same tax year without affecting how much you can invest in one year. Flexibility also applies to money you have invested in previous years. 


Here is an example to better understand the scheme:

Let’s say you have a flexible cash ISA of £35,000. This is made up of £25,000 accumulated in previous tax years and £10,000 that you have managed to save in the current year. For the current tax year, that still leaves you with £10,000 that you can invest, as the maximum sum is £20,000 for this year. You decide to withdraw £15,000 from your ISA, which means you can still put £25,000 back this year into your account: the £15,000 you have withdrawn and the £10,000 still remaining from your annual allowance. 


In case you have a non-flexible ISA, the money you withdraw from your account reduces your remaining annual allowance that can be still used for that tax year. For example, if you had already reached the allowance limit and decided to take money out, you would not be able to put the money back in within that tax year. 

Not all providers offer flexible ISAs: it is up to them if they offer this kind of product, and if so for which type of ISA. Before you sign up for an ISA, make sure you clarify the flexibility rules before signing a contract. Note that Lifetime ISAs (LISAs) and Junior ISAs (JISAs) cannot be flexible. Bear in mind also that even if your provider offers flexibility on fixed-rate ISAs, you will still need to pay a penalty fee for early withdrawal. 

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Edith Balázs
Author of this article
I bring 20+ years of experience as a correspondent having worked for Bloomberg, Dow Jones and The Wall Street Journal covering macroeconomics, stock, currency and fixed-income markets. I hold a Master's degree in American Studies and Journalism.
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