A quick question for Freetrade/community- Will ISA accounts be ‘flexible’? As in, money withdrawn from the ISA is added to the Tax Free Allowance.
ISA allowance £20,000
£5,000 subscribed to Freetrade ISA. Remaining allowance £15,000
£2,000 withdrawn from Freetrade ISA. Remaining allowance is £15,000 but would be £17,000 in a Flexible ISA.
I don’t know how set account properties are at this point but it would be interesting to hear the other members’ opinion on this and whether such a feature would be appreciated.
We’re discussing flex ISAs right now and @Rob and @rob_h are big fans. Can’t confirm whether they’ll be immediate (or indeed later) feature of our ISAs but it’s certainly the kind of feature we’d like to execute.
Hey! Are there any further updates regarding flexible ISA’s?
It is such a useful and underutilised product that I feel Freetrade in particular could promote and open up its use for everyone. Currently so few investment platforms offer it and for those platforms that do offer it, aside from them being expensive they all have awkward restrictions around investing internationally e.g. 1) they simply cannot tell you the universe of int. stocks available 2) they only do domestic stocks 3) for Charles Stanley you can do it over the phone only (!!!) and take a £20 hit lol.
I would use Freetrade a lot more with a flexible ISA as I would have the option to take out money as I see fit and replace it by the end of the tax year without being penalised for it i.e. damaging the tax shield etc. Such an important feature in my view as it could save people a lot of money and avoidable stress! Would love to get an update - thanks!
…let’s assume I have put £20k into my non-flexible stocks and shares ISA and let’s say I decide to withdraw £2k because some shares have appreciated and I want to go on holiday, replace my broken boiler, [insert personal expenditure] - whatever - that means I would not be able to top this ISA back up by £2k to replace this expenditure at a later date within the same tax year, as my £20k allowance is fully utilised. This seems daft. With the flexible ISA, I could add the £2k back and pay myself back so to speak. I am not penalised, therefore.
Flexible ISAs are great, such that one can withdraw dividends and odd amounts left over after the execution to not store cash in the investment account which is not intended to be invested. Without loosing ability to put it back in.
Implementation wise, there are small changes in reporting of subscriptions to HMRC, and tracking of past years contributions / current / flexible. Any withdrawals first are flexible from prior years, and only after all those exhausted count as withdrawals from current year.
It is a great differentiator: Vanguard, IG, Abundance offer flexible ISAs, and that’s why I choose them. Not having flexible ISA makes me not choose a platform. Also not having ability to pay account fees using outside funds also makes me not choose a platform. (As in basic account, should be usable to pay for the ISA fees).
The FIFO accounting of flexible ISA balance is only slightly more complicated (and HMRC reporting) for flexible ISAs. And it allows one to withdraw flexible ISA balance from one account and deposit to another flexible ISA type for the current year - to give people ability to move cash ISA <-> Freetrade ISA on self service basis.
Erg… It’s not a separate place, but a feature of an ISA how withdrawals are counted w.r.t. allowing to put them back in. E.g. top up full 20k allowance, buy stocks/ETFs/keepcash, get some interest/dividends or sell something, withdraw cash. Now in a flexible ISA before end of tax year one can put whatever amount of money was withdrawn back in. In a non-flexible ISA - one cannot.
I agree, this would be high on my wishlist for Freetrade right now because it just makes sense and would bring it in live with other tax-free investing policies in other countries right now (e.g., Canada).