Some cash ISA providers offer a flexible facility that allows you to withdraw and replace money from your cash ISA without it affecting your annual allowance. This is on the condition that you top up your cash ISA in the same tax year the withdrawal was made.
For example, let’s say you had paid £10,000 into your cash ISA this tax year. This would mean you could pay in another £10,000 before 6 April. However, if you withdrew £5,000, a flexible ISA would allow you to pay in a further £15,000 this tax year – the £5,000 previously taken out, plus the remaining allowance of £10,000.
In comparison, if you took money out of a non-flexible ISA and then replaced it, the money you put back in would count against your ISA allowance for the tax year. So in the above example, you’d only be able to pay in £10,000.
Not all cash ISAs are flexible, so check carefully.
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