There is currently more than £600 billion sitting in adult ISAs. In the 2017/2018 tax year, around £69 billion was saved into adult ISAs - around £131,000 every minute.
Over the years a number of developments have made ISAs even more attractive. Enter... the flexible ISA.
Yes - but previously the flexible feature refers to the rules that allow investors to switch existing ISA savings held in Cash ISAs over to a Stocks and Shares ISA - and back again.
A flexible ISA allows investors to withdraw and replenish money from the account in the same tax year. In a non-flexible ISA, if you pay £20,000 into your ISA and decide you need to take out £2,000, you won’t be able to replace that money. That’s because you have paid the maximum amount allowed under the rules into your ISA.
However, under the flexible ISA rules, you can pay the money you have taken out (£2,000) back into your ISA and keep it all tax-free.
Yes. The rules allow you to take money out and replace it in both cash and Stocks and Shares ISAs. The rules state that you can only withdraw from the cash element of your Stocks and Shares ISA, rather than selling units in shares, bonds or funds. However, you can get around this by selling the shares, turning them into cash and then withdrawing the cash you need.
Yes and no. The flexible ISA was actually introduced in 2016.
However, ISA providers don’t have to offer flexible ISAs. The government rules state it is up to individual providers to decide.
Flexible ISAs are more commonly found in the Cash ISA space, yet a small - growing - number of Stocks and Shares ISA providers are expanding their services and allowing flexibility.
The good news is that EQi is now one of just three providers that offer a flexible Stocks and Shares ISA.
Although it is better to leave your savings where they are so that your money can keep growing, sometimes circumstances require getting hold of cash unexpectedly.
Having peace of mind that you can benefit from your full ISA allowance and have access to your money will be important for many households from a cash flow basis.
For example, it is likely to be of particular value for the growing army of self-employed people in the UK. The number of self-employed workers has increased from 3.3 million in 2001 to 4.8 million in 2017* according to the latest figures.
Cash flow can prove a problem as many workers wait for invoices to be paid - and many find there are delays at a time they need to pay for something. Being able to use ISA savings as a buffer can be a real plus.
Equally for those who need to pay for something before an annual bonus arrives a flexible ISA could prove extremely useful.
Junior ISAs, Help to Buy ISAs, Lifetime ISAs, and of course, any element of a Stocks and Shares ISA that is not cash - that is, shares, bonds or funds - are not flexible. But again, if you need to access more cash than you hold in your portfolio, then you can sell any stocks or shares and place the gains into cash and withdraw it.
So there you have it: ISAs are simple, flexible, attractive tax shelters for investments and savings.
Anyone keen to maximise their opportunity to save and invest tax-free by using their £20,000 allowance can get started.
*Office for National Statistics (link)
ISAs are one of the most tax efficient ways to save. But with interest rates on cash savings low, more people are looking for higher returns.