Fixed rate ISAs - do you pay a penalty for withdrawing before the fixed rate ends?

skaps

Hi am thinking about my new isa for the new tax year and wanted to know more about fixed rate isas and the penalties you face for taking out money before the fixed rate ends. Any information is appreciated.

Baldur

You need to read the Terms & Conditions of each specific FRISA, as penalties will be different for each account.

Some charge a penalty of xxx days interest, at least one charges a fixed penalty.

bryanb

Also be aware that some do not allow early withdrawal (unless you die)

AirlieBird

bryanb wrote: »

Also be aware that some do not allow early withdrawal (unless you die)

Not correct. Or if it is, then they are operating against the ISA rules. What you say was practice in the early days of ISAs until the Inland Revenue, as they were then, issued a directive that all money held in an ISA must be accessible at all times subject to 'reasonable' notice periods or penalties.

Careful_ly

EDITED as my post was not correct as pointed out by martinman3 below. I am pleased that AirlieBird pointed this out as I was unaware, and I am looking to transfer at the moment. The example I gave was to Principality and it appeared to be no withdrawals, then in the other info withdrawals are possible

martinman3

Careful_ly wrote: »

I do not think this is correct as there are many fixed accounts with no access as pointed out by bryanb.

http://www.principality.co.uk/default.aspx?page=1809, for example

No, AirlieBird is correct, for your example
although Product Features says "No withdrawals permitted prior to maturity" under "Additional Information"

4. Closure of your ISA will be permitted subject to loss of 360 days' interest.
5. Your ISA may be transferred direct to another approved ISA provider subject to loss of 360 days' interest. You must transfer the full balance in your ISA and not just part of it.

Some organisations do allow withdrawals or transfers out with no penalty up to a certain limit. Leeds BS is one of them.
See http://www.leedsbuildingsociety.co.uk/savings/fixedrateisa2year.html

Withdrawals/transfers can be made of up to 25% of your capital investment without notice or loss of interest prior to maturity (30 April 2012). If you exceed this limit, the account will be subject to 120 days loss of interest or an equivalent amount on the amount withdrawn/transferred.