Flexible individual savings accounts (ISAs) allow holders to withdraw money and then replace it within the same tax year without it counting towards that year’s ISA allowance.
Only a certain amount can be put into an ISA each tax year, and in a normal ISA account any money taken out and then replaced would count towards that year’s allowance. If the annual allowance had already been used, then an investor would not be able to replace the funds in the ISA account.
For example, let’s say the annual ISA allowance is £20,000 and a saver has put £15,000 in an ISA account that year. The saver then withdraws £10,000, leaving £5000 in the account. In a normal ISA account, the saver would only be able to put £5000 more in that ISA account that same tax year. In a flexible ISA, the saver would be able to put the £10,000 withdrawn back into the account and still add a further £5000.
Not all ISA providers offer flexible ISAs.
