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Flexible Isas might encourage long-termism

Thank you to the 41 people who have written to me to say that they wished their platforms offered flexible individual savings accounts (Isas) following my column last month ('Time for all platforms to offer flexible Isas', IC, 25 June 2021).

Flexible Isas enable you to withdraw and replace money in the same tax year without affecting your annual allowance. For example, say you had an Isa worth £100,000. You could withdraw half of it early on in the tax year and pay back in as much as you withdrew before the tax year ends – as well as that tax year’s Isa allowance. If your Isa is not flexible, you can only pay in the current tax year’s Isa allowance, irrespective of how much you take out.

Certain life events can make this flexibility attractive. One reader says: “While I appreciate there is risk in selling investments and being out of the market, I am likely to need a few tens of thousands to complete some building works on a piece of land which I expect to more than recoup (though not guaranteed) three to nine months later.” 

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