05 April 2016

ISA Flexibility gives you more freedom with your savings

From 6 April 2016, the Government is introducing ISA Flexibility and Nationwide cash ISAs are changing. You now have the peace of mind of knowing that any money you take out of your cash ISA can be replaced in the same tax year without impacting your annual ISA allowance.

ISA Flexibility will be available across the Nationwide cash ISA range (with the exception of Junior ISA products) which means you can deposit and withdraw funds (in line with product terms and conditions) from any cash ISA product without impacting your annual ISA allowance.

Before 6 April 2016

Under the previous ISA rules, you could only deposit up to the annual ISA allowance for that tax year irrespective of any money withdrawn. If money was withdrawn and replaced, it would always count towards your annual ISA allowance.

  • For example, say you had a cash ISA containing £15,240 which you’d paid in using your annual ISA Allowance for the Tax year 2015/2016, and you withdrew all of it to pay for a holiday. If your plans fell through and you wanted to pay that money back in during the same tax year, you wouldn’t be able to
  • If you had an ISA with an annual ISA allowance of £15,240 but you had only paid £10,000 into it during the tax year, you could withdraw £1,000 and then pay it back in. But you would have used up £2,000 of your allowance - £1,000 the first time you paid it in, and £1,000 the second time.

Essentially, the old rules meant that you needed to think carefully before withdrawing money. Withdraw and replace money too often, and the whole allowance could be used up without you having any savings in your ISA to show for it.

What's new with cash ISAs?

From 6th April 2016, you can replace money you’ve withdrawn earlier in the tax year from any Nationwide cash ISAs, without impacting your annual ISA allowance as long as you replace it in the same tax year. That means you can take everything out and put it back in again as many times as you like within the same tax year, without counting towards your annual ISA Allowance.

Say you paid £15,240 into your cash ISA at the start of the tax year in April, and then withdrew it all to pay for a new car in July. Then in October, you received a surprise £15,000 bonus. You could pay this back into your ISA with us.

ISA Flexibility – Nationwide’s perspective

James Broome, Head of Customer Proposition says ‘Anything that makes saving more tax-efficient and makes ISAs more attractive to customers has got to be a good thing. That’s especially true given the low interest rate environment we’re in, which has made things tough for savers. So we’re always going to be fully supportive of anything that helps them.’

Great news – but there are a few things to remember…

  • If you’re saving in a Help to Buy: ISA, you can replace any money you withdraw. But you’ll still only be able to pay in up to £200 every month during the life of the ISA
  • Junior ISAs aren’t included in the ISA flexibility change
  • If you have a fixed-rate cash ISA you can only withdraw all the money and close the account. You can then replace it in another Nationwide cash ISA within the same tax year. There will be a charge for early withdrawal though.

Considering a new cash ISA?

See Nationwide’s cash ISA range

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