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What is a flexible ISA? How does it work?

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Rhiannon Philps

Content Writer

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At a glance

  • Flexible ISAs allow you to withdraw and replace your money without affecting your annual ISA allowance of £20,000.
  • Cash ISAs and stocks & shares ISAs can benefit from flexible ISA rules.
  • Not all providers will offer flexible ISAs, so it’s always worth checking the small print.

If you’re looking to take out an Individual Savings Account (ISA), you may see that some are described as “flexible” ISAs.

This simply means that you can withdraw money from the ISA and replace it in the same account without affecting your annual ISA allowance.

Flexible ISA rules were introduced by the Government in 2016 so savers wouldn’t be penalised if they needed to dip into their ISA savings.

Read on to find out how flexible ISAs work and whether they could be useful for you.

What is a flexible ISA?

A flexible ISA allows you to withdraw money and replace it back into your account without it counting towards your annual £20,000 ISA allowance, as long as you do this in the same tax-year.

For example, if you deposit £15,000 into an ISA, you have £5,000 of your ISA allowance remaining for that tax-year. If you withdraw £10,000 from your account, a flexible ISA will allow you to pay in £15,000 until the end of the tax-year (made up of the £10,000 you withdrew and the £5,000 left of your allowance).

By contrast, a “non-flexible” ISA will count any deposit into your account towards your ISA allowance. So, using the above example, after withdrawing the £10,000, you would only be allowed to pay in the £5,000 you have left in your ISA allowance.

If you withdraw money from a flexible ISA that you deposited in a previous tax-year, this also won’t affect your current ISA allowance.

For example, you might have £30,000 in your flexible ISA that you saved from previous tax-years, but you haven’t deposited any money in the account in the current tax-year. If you withdrew £10,000 from your ISA, you could replace this money in the same tax-year and still have your full annual £20,000 ISA allowance available to use.

Bear in mind that you need to replace the money in the same account and in the same tax-year that you made the withdrawals to take advantage of the flexible rules.

Are all ISAs flexible?

Only cash ISAs, stocks and shares ISAs and innovative finance ISAs can be flexible. However, not all these types of ISAs will apply flexible rules. It’s up to individual providers whether they offer flexibility, so it’s worth checking the rules before opening an account.

Flexible rules don’t apply to Lifetime ISAs or Junior ISAs.

What are the benefits of a flexible ISA?

The key benefit of a flexible ISA over a non-flexible ISA is that you can access the money you have saved into your account without worrying about how it will affect your ISA allowance.

So, for example, you could withdraw some of the money you have saved in your ISA to cover an unexpected cost, such as emergency repairs. And, as long as you replace the money you’ve withdrawn into the same account in the same tax-year, your ISA allowance and tax-free perks won’t be affected.

Is a flexible ISA worth it?

The question of whether a flexible ISA is worth getting depends on your individual situation and how likely you are to want access to the money in your ISA.

If you think you’ll use most of your ISA allowance or need to dip into your ISA throughout the year, a flexible ISA is likely to be a better option than a non-flexible ISA, as you can withdraw money and replace it without affecting your ISA allowance.

However, even if an ISA is flexible, it’s worth checking if there are any other restrictions as some providers may reduce the rate if you make multiple withdrawals in a 12-month period, for example.

If you’re unlikely to use the majority of your full annual ISA allowance or you’re not planning to use the money in your ISA, it may not be so important for it to be flexible. Instead, you may prefer to save into an ISA that isn’t flexible but pays a higher rate or has other features that are more important for you.

It’s also worth considering whether a savings account could be more appealing than an ISA. Savings accounts typically pay a higher interest rate than ISAs so, if you’re not in danger of going over your Personal Savings Allowance (PSA), a savings account could be worth considering instead.

Transferring a flexible ISA

While you can transfer a flexible ISA to another ISA, you should check how this will affect your annual allowance.

If you want to transfer a flexible ISA from the current tax-year, your existing provider will tell the new provider how much of your allowance you have left to use. This figure will be the amount you’ve deposited in the ISA, minus any withdrawals.

For example, if you deposited £10,000 in your account and withdrew £5,000, then requested a transfer, the provider will say that you have used £5,000 of your allowance. Therefore, you would be able to deposit up to £15,000 in your new ISA until the end of the current tax-year.

However, if you’ve withdrawn money from a previous tax-year and plan to replace it, you should do this before starting the transfer.

If you don’t replace this money, you won’t be able to carry over your “flexible allowance”. So, any money you deposit into your new ISA will count towards your ISA allowance for the current tax-year.

Who offers flexible ISAs?

Many providers offer flexible ISAs, but there are still quite a few that don’t.

On our ISA charts, you can see if an ISA is flexible by clicking “view further details” for the relevant provider.

Compare ISAs

Our ISA charts are regularly updated so you can see the best rates available, whether you’re looking for an easy access ISA, a fixed-rate ISA or a notice ISA.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice. will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by will always be from Be ScamSmart. will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by will always be from Be ScamSmart.