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Flexible ISA guide

If you like to save but sometimes need to access your money, a flexible ISA gives you the best of both worlds whilst still benefiting from tax-free savings.

What is a flexible ISA?

A flexible ISA is a cash ISA that gives you more freedom with your savings. if your circumstances change, it allows you take money out and put it back in — without affecting your annual ISA allowance, as long as it’s done within the same tax year and replaced back into the same account.

How does a flexible ISA work?

Let’s run through the ISA basic rules first:

Everyone gets an annual ISA allowance per tax year .
A tax year starts from 6th April to the 5th April the following year.
For the current tax year, you can save up £20,000 in cash ISAs.

With a standard cash ISA, if you withdraw money, that amount still counts towards your annual ISA allowance for the tax year, and you can't replace it.

Flexible ISA rules:

With a flexible ISA, the rules are different.

Example: Let’s say:

For the current tax year your ISA allowance is £20,000, and if you pay in £5,000 into your flexible ISA.
You then withdraw £2,000.
You can still pay in up to £17,000 that same tax year (April 6th - April 5th) as long as your ISA is flexible.
Your remaining £15,000 allowance, plus the £2,000 you took out.
When you withdraw from a flexible ISA, that money can be replaced without it reducing your annual ISA allowance.

Just remember:

The money must be replaced in the same tax year.
It must go back into the same account, with the same provider.

ISA allowance: standard cash ISA vs flexible ISA

Here’s a step-by-step example of how your ISA allowance is affected when you deposit and withdraw money in a flexible vs standard cash ISA.

Step 1: You open and pay in £5,000 into your ISA account

Standard cash ISA	Flexible cash ISA
£5,000 of your £20,000 ISA allowance has been used.	£5,000 of your £20,000 ISA allowance has been used.

Step 2: You withdraw £2,000 in the same tax year

Standard cash ISA	Flexible cash ISA
£5,000 of your £20,000 ISA allowance has been used. You may be subject to a withdrawal penalty depending on the standard cash ISA you have. Check with your provider first.	Counts as £3,000 used of your £20,000 ISA allowance limit. £17,000 remaining to use.

Step 3: You pay the £2,000 back later in your account in the same tax year

Standard cash ISA	Flexible cash ISA
Now £7,000 used – only £13,000 left of your ISA allowance remaining for the tax year.	Still only used £5,000 of your ISA allowance in the same tax year you opened your flexible ISA. You have £15,000 left.

Pros and cons for a flexible ISA

Pros:

Withdraw and replace money without affecting your allowance.
More flexibility if life or plans change.
Ideal for savers who may need access to funds, providing you haven’t invested in a fixed rate account.
Tax-free savings up to £20,000 a year.

Cons:

Withdrawals must be replaced in the same tax year.
Flexibility is lost if transferred to a non-flexible ISA.
Doesn’t apply to fixed rate ISAs, LISAs, or Junior ISAs.

What flexible ISAs do Nottingham Building Society provide?

Take a look at what flexible ISAs we have on sale to see if any suit your saving needs.

With our flexible ISAs, you can:

Save up to £20,000 tax-free (subject to eligibility).
Withdraw and replace money freely during the tax year.
Enjoy peace of mind knowing your savings are flexible if you need them.

You’ll need to be:

Aged 16 or over.
A UK resident.
Have a National Insurance number.

What’s the difference between a fixed rate ISA and a flexible ISA at Nottingham Building Society?

A fixed rate ISA:

Offers a guaranteed interest rate over a set term.
We don’t allow withdrawals on our fixed rate ISAs, but you can transfer them subject to an interest penalty.
Cannot be flexible

A flexible ISA:

Offers a variable rate (which can go up or down).
Lets you withdraw and replace money during the same tax year.
Keeps your ISA allowance intact, as long as the flexible ISA rules are followed.

Frequently asked questions

How is a flexible ISA different to a non-flexible ISA?

The key difference is what happens when you withdraw money.

With a non-flexible ISA, any money you take out still counts towards your annual allowance - even if you pay it back in.

With a flexible ISA, that’s not the case. You can take money out and replace it in the same tax year, without losing any allowance.

Can I transfer my ISA to a flexible ISA?

Yes. You can transfer both current and previous years’ ISA savings into a flexible ISA with us. However, if you’ve already withdrawn money from another provider before transferring, that money can’t be replaced once the transfer is complete.

What happens if I withdraw from my flexible ISA?

If you withdraw money and then pay it back into the same account in the same tax year and the account is still open, it doesn’t affect your ISA allowance. If you don’t replace it, or try to pay it into a different ISA, it will count towards your limit.
At Nottingham Building Society you don’t have to provide us any notice before you withdraw money from your flexible ISA.

Open a flexible ISA

Our flexible ISAs are available to open in any one of our branches. Pop into a branch and have a chat with us to find out if it’s the right option for you.

Before you do though, why don’t you first take a look at our flexible ISA rates.

See our flexible ISAs

See our flexible ISAs

A flexible ISA could be a great option if you want the reassurance of tax-free saving, with the added peace of mind that you can access your money if you need to - without losing out on your full allowance. It’s savings that adapt to life, not the other way round.

Please don’t use this guide as advice, you’ll need to consider and make your own decisions. If you have any further questions, we recommend seeking legal and/or financial advice.