Building Freetrade

Your Freetrade ISA is now flexible

Marta Fedoniuk

July 11, 2024

Marta Fedoniuk

We’re pleased to announce your Freetrade stocks and shares ISA is now flexible.

This change gives you more freedom and flexibility to move money in and out of your ISA, without impacting your annual allowance.

An ISA, or Individual Savings Account, is a tax-efficient account that protects your savings and investments from:

  • Capital gains tax
  • UK dividend income tax, and
  • Tax on savings interest.

You have an annual allowance of £20,000 per tax year that can be put into a single ISA or combination of ISAs.

For the full lowdown, check out our What is an ISA? article.

What’s a flexible ISA?

When an ISA is “flexible”, you can withdraw money from your ISA and, provided you return it within the same tax year, you won’t lose that part of your allowance.

When an ISA isn’t flexible, any withdrawals you make won’t be added back to your annual allowance, so you won’t be able to return those withdrawals. Effectively, you lose that part of your allowance.

How does this work in practice?

If you put £10,000 into your ISA and then decide to withdraw £5,000 in the same tax year, your remaining ISA allowance will differ depending on whether your ISA is flexible or not.

  • If your ISA is not flexible, your annual allowance won’t reflect the withdrawal. Although you have only £5,000 in your ISA now, your remaining allowance is still £10,000 (rather than £15,000). Effectively, you have lost £5,000 of your annual allowance.
  • The Freetrade ISA is flexible, the withdrawal will be reflected on your annual allowance. You have £5,000 in your ISA, and can still put another £15,000 away before the end of tax year. You haven’t lost any of your allowance.

Your flexible ISA has “flexible withdrawals” 

This is where you can withdraw over your £20,000 allowance (i.e. dipping into your savings from previous tax years) and then return that cash to your ISA without it impacting your current year’s allowance.

Your “flexible withdrawals'' can be returned within the same tax year. After that, your ISA resets and you can’t put that money back in. Flexible withdrawals can only go back into your Freetrade ISA - not another ISA, even if that ISA is also flexible.

Click here for more examples, including how the flexible withdrawals work.

Withdrawals made before the ISA became flexible

The Freetrade ISA became flexible on 11 July 2024.
If you withdrew money from your ISA between the start of the tax year (6 April 2024) and this date, your withdrawals won’t retroactively be reflected on your annual allowance. As the ISA wasn’t flexible during this time, you won’t be able to return that cash.

You don’t need to do anything, your ISA is now flexible

No action is needed to make your ISA flexible.

This change has been rolled out to all Freetrade ISAs, and you can now enjoy the added ISA flexibility!

Making your ISA flexible is part of our continued work to build a better Freetrade. We’ve got many more exciting developments on the roadmap for this year - watch this space!

If you have any questions or want to chat about this change, head over to our Community forum where members have been discussing this.

Learn more:

When you invest, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you invest.

ISA eligibility rules apply. Tax treatment depends on personal circumstances and current rules may change. The Freetrade ISA is flexible as of 11 July 2024. Withdrawals before this date cannot be replaced under the flexible ISA rules. Check your remaining ISA allowance in your app.

The views expressed above are those of community members and do not reflect the views of Freetrade. It is not investment advice and we always encourage you to do your own research.

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