What is a flexible ISA?

With a flexible ISA, you can withdraw money and then return it in the same tax year, without using your ISA annual allowance. 

The ii Stocks and Shares ISA is not flexible.

How do flexible ISAs work?

Flexible ISAs allow you to replace money you have withdrawn from your ISA.

For example, you add £10,000 to a flexible ISA before withdrawing £4,000. You could add the £4,000 back without using any of your annual allowance – as long as you replace it in the same tax year. 

In this scenario, after making the first withdrawal, you could add another £14,000 in the tax year. 

Please note that you can only replace the money in the ISA you withdrew the money from. For example, you cannot withdraw money from your flexible Cash ISA and replace it in your Stocks and Shares ISA. 

Can you withdraw money contributed in a previous tax year?

If you withdraw money which was contributed in a previous tax year, you can still replace that money in a flexible ISA. 

However, you cannot replace money which was withdrawn in a previous year. At the beginning of each new tax year, your ISA annual allowance resets at £20,000. The current tax year ends on 5 April 2025. 

Are all ISAs flexible?

Not all ISAs are flexible. 

For example, if you added £10,000 to a non-flexible ISA, and then withdrew £4,000, you could not replace the money you withdrew. Your remaining ISA annual allowance would be £10,000. 

Are flexible ISAs worth it? 

Whether a flexible ISA is worth it or not really comes down to you and your circumstances. Whilst they do allow you to replace cash you’ve withdrawn if you change your mind, there’s also limitations. 

Having the ability to take out cash can make it more tempting to withdraw from your longer-term savings. This can put you out of the market as you may need to sell your holdings or use cash that’s uninvested, missing out on the potential to earn investment returns.