Last year the government changed the rules on individual savings accounts (Isas) to make them more flexible. Since April 2016 it has been legally possible to take money out of an Isa and replace it within the same tax year without eating into your annual Isa allowance, which is £20,000 for the 2017-18 tax year.
This is possible with cash, stocks-and-shares and Innovative Finance Isas, and also means you could take money out of one type of Isa and put it into another, as long as you withdraw and replace money from the same tax year and your provider offers flexibility. For example, if you have already paid £5,000 into an Isa during this tax year, you could take out that £5,000 and put £20,000 back in within this tax year without maxing out your allowance.
However, only about one-third of cash Isa providers are offering flexible Isas, and even fewer providers offer flexible stocks-and-shares Isas. According to Moneyfacts.co.uk, only 27 out of 81 cash Isa providers offer a flexible fixed or variable-rate cash Isa.
Those offering flexible Isas include Coventry Building Society, which pays an interest rate of 1.05 per cent on its Easy Access Isa, and Skipton Building Society, which offers a rate of 1 per cent on its Bonus Cash Isa Issue 8.
Providers offering flexible fixed-rate Isas include Aldermore, which pays 1.25 per cent on its 3-Year Fixed Rate Cash Isa and Newcastle Building Society, which pays 1.15 per cent on its Two-Year Fixed Rate Isa (Issue 20).
"There are very few big bank brands offering flexible Isas with decent rates right now, which is disappointing," says Rachel Springall, finance expert at Moneyfacts.co.uk. "It would have been beneficial for savers to have had more support for flexible Isas, but there is no way of forcing providers to offer this type of flexibility. Luckily, some of the easy-access Isas with the best interest rates allow flexible access, including those from Coventry Building Society and Skipton Building Society."
Being able to move money in and out of an Isa is useful if you have a short-term cash need but want to pay the same amount back in within the same tax year, as well as contribute up to the maximum annual Isa allowance.
Best rates on instant-access flexible Isas
| Provider | Account | Notice period | Gross rate of interest (%) |
|---|---|---|---|
| Coventry Building Society | Easy Access ISA (5) | Instant | 1.05 |
| Skipton Building Society | Bonus Cash ISA Issue 8 | Instant | 1 |
| Skipton Building Society | Online Bonus Cash ISA Issue 8 | None | 1 |
| Principality Building Society | Principality Promise ISA Issue 10 Up to 2 withdrawals pa | 30 Day | 0.9 |
| Family Building Society | Market Tracker Cash ISA (2) | Instant | 0.86 |
| Aldermore | 30 Day Notice Cash ISA Issue 7 | 30 Day | 0.8 |
| Ford Money | Flexible Cash ISA | None | 0.8 |
| Newcastle Building Society | Community Saver ISA (Issue 1) | Instant | 0.8 |
| National Counties Building Society | 5th Issue 45 Day Notice Cash NISA | 45 Day | 0.75 |
| Metro Bank | Instant Access Cash ISA | Instant | 0.75 |
Source: Moneyfacts, as at 11.04.17
Best rates on fixed-rate flexible Isas
| Provider | Account | Term | Gross rate of interest (%) |
|---|---|---|---|
| Aldermore | 3 Year Fixed Rate Cash ISA | 3 Year Bond | 1.25 |
| Aldermore | 2 Year Fixed Rate Cash ISA | 2 Year Bond | 1.2 |
| Newcastle Building Society | Two Year Fixed Rate ISA (Issue 20) | 23.05.19 | 1.15 |
| Ford Money | Fixed Cash ISA 2 Year | 2 Year Bond | 1.1 |
| Aldermore | 1 Year Fixed Rate Cash ISA | 1 Year Bond | 1 |
| Newcastle Building Society | Community Saver One Year Fixed Rate ISA (Issue 2) | 23.05.18 | 1 |
| Ford Money | Fixed Cash ISA 1 Year | 1 Year Bond | 0.95 |
| Barclays Bank | 2 Year Premier Flexible Cash ISA - Issue 2 | 2 Year Bond | 0.9 |
| Barclays Bank | 2 Year Flexible Cash ISA - Issue 15 | 2 Year Bond | 0.75 |
| SAGA | 1 Year Fixed Rate ISA | 1 Year Bond | 0.75 |
Source: Moneyfacts, as at 11.04.17
