Flexible Cash ISAs

purpleglobe52

If someone transferred a previous years Stocks and Shares ISA of a large value (way over the £20k annual limit) to a cash ISA that offers 'flexibility', once the transfer has arrived into the cash ISA, can they then withdraw the full amount and replace it back into the cash ISA as long as it is in the same tax year? Thanks in advance.

eskbanker

Yes, flexible ISAs allow withdrawal and replenishment (within the same tax year) of any amount.

sweeter_strudel

Sorry if this looks like I'm hijacking this thread, but I was hoping for an explanation for what I think I have read folks are doing with flexible cash ISAs. (I can't seem to find a thread this morning that I recently read....)

Historically I've been very fortunate and as an individual fully funded S&S ISAs with the max limit every year. I'm now in the lucky position of all my investments either being in tax efficient ISAs or SIPPs. This tax year I doubt I will fully fund an ISA to the current £20k limit, but anticipate freeing up a large cash amount in two or three years time when I downsize and sell my main residence.

I now need to get my head around flexible cash ISAs in particular, which is where the helpful folks in this forum come to mind.

Can I open a flexible cash ISA for the 25/26 tax year, immediately add £20k, then withdraw it all apart from a token minimum £100 or so to keep the ISA open; and then do the same with flexible cash ISAs in the 26/27 tax year; and 27/28 tax year.

Then when I downsize and have surplus cash, can I put three lots of £20k back into the three flexible cash ISAs I have set up, that have been sitting in anticipation of this moment?

Or do I need to add (and withdraw) £20k (or £19,900 more correctly) each and every tax year, from each of the three flexible ISAs, every year, after I have set them up, to keep the £20k max limit available to me to use at a later date?

Or is this gaming the flexible ISA system and not possible?

where_are_we

25/26 tax year is gone! 26/27 tax year - you can open and contribute £20K into a new flexible cash ISA and then withdraw all but £100. However you would have to replace the £19,900 you have withdrawn back into that same ISA before the end of the 26-27 tax year on 5/4/2027 if you want to keep the 26-27 ISA tax wrapper intact on that £20k. 27-28 tax year - remember that the £20K cash ISA allowance is being reduced to £12K for those 65 and under. And yes you would have to open a new flexible cash ISA each tax year

Albermarle

Can I open a flexible cash ISA for the 25/26 tax year,

A month too late to do that !

To answer your wider question. Money withdrawn from a flexible ISA, has to be replaced within the same tax year, to avoid it losing its ISA /tax free status.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81986351#Comment_81986351

Re "you would have to open a new flexible cash ISA each tax year", there is no such requirement and the same one can be used year after year.

ToastLady

You don't have to open a new flexible easy access ISA every year, you can keep on using the same one if you wish. Whether you would want to is another thing as rate changes, better offers come along.
If it's a flexible fixed ISA, you may have to open each year, depending on the terms of the ISA. Some multi year ISA's allow money in future years, but they are few and far between.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81986428#Comment_81986428

Are you aware of any flexible fixed ISAs? I don't recall coming across any and can't think why anyone would offer one…

sweeter_strudel

Thank you for pointing out I'm a year behind reality.....

And also thank you for reminding me about the lowering of the £20k cash ISA limit to £12k for those not yet 65 in tax year 27/28.

It looks like I need to work out a few years of incomings and outgoings around the date of my downsizing.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81986431#Comment_81986431

Barclays is one provider that offers fixed rate flexible ISAs from time to time. For example 2-3 years ago they had them at ~5%, which was handy as rates subsequently crept down. I recall some folk opening one speculatively for exactly this reason. I'm not sure why they offered flexibility either, but larger banks do strange things sometimes, such as offering access for a fee on non-ISA fixes.

ToastLady

https://forums.moneysavingexpert.com/discussion/comment/81986431#Comment_81986431

Barclays, as Masonic has already mentioned. If you do a full search on Moneyfacts, choosing flexible, when looking at fixed ISA's, it does come up with a few. Caveat is that many will charge a penalty for withdrawing funds, but will allow you to replace in current tax year. This is new to me too, only found out about it on a thread on this forum in the past week.


Edited to include thread:- https://forums.moneysavingexpert.com/discussion/401374/cash-isas-the-best-currently-available-list/p1097