Just 1 in 3 cash Isas gives you flexible access

LESS than a third of toppaying easy-access cash Isas allow savers to put in their full Isa allowance and take money out without losing the tax breaks, a Money Mail investigation has found.

Isa providers have been allowed to make accounts ‘flexible’ since last year. Savers won’t lose any allowance for taking money out and putting it back in the same tax year.

But banks and building societies can choose whether they offer this flexibility. Our research found most providers haven’t bothered. The culprits say there is no demand. But experts say that will change now the cash Isa allowance is a huge £20,000.

The top-paying Isas that offer flexibility include Coventry BS Easy Access Isa 5 at 1.05 pc, Skipton Bonus Isa at 1 pc including a 0.35pc bonus for a year, Ford Money Flexible Isa and Newcastle BS Community Saver Isa 1 at 0.8 pc, and Nationwide Flexclusive at 0.75 pc.

Those without flexibility include top payers such as NatWest Cash Isa, RBS Instant Cash Isa, Leeds BS E-Isa, Family BS Market Tracker, Virgin Money Defined Access, Santander EISA and NS&I Direct Isa.

Critics say the Government should force providers to offer flexible accounts to make life easier for savers.

Andrew Hagger, personal finance expert from Money-Comms, says: ‘Flexibility is key now the cash Isa allowance is £20,000. Those who have been building up cash Isas for years will have substantial sums in their accounts. The Government should rethink cash Isas and say to providers they have to offer this feature.’ Anna Bowes, director at savings advice website Savings Champion, says: ‘All providers should offer this option, if only to keep the cash Isa a simple savings account.’

Savers taking out a cash Isa , or transferring to a new provider, now need to check if the account offers flexibility if they want it.

If you transfer from a flexible to a non-flexible account, you must replace any money you have taken out before you switch. If you don’t, you will lose that part of your allowance.

If you put in your full £20,000 and then take out £5,000, you can replace the withdrawal in a flexible cash Isa. But if you move to a non-flexible version before you replace the £5,000, your allowance effectively drops to £15,000 for this tax year. Providers that offer flexible Isas keep track of what goes in and out to ensure you don’t go over the limit. Transactions on these accounts are no more complicated than normal. Those that don’t offer this feature argue that there is little demand or they are focusing on other accounts. A spokesman for RBS says: ‘We have not seen significant demand for a flexible Isa as the vast majority of our Isa savers like to build their balances over time, rather than make multiple deposits and withdrawals.’ A Santander spokesman says: ‘We have decided to prioritise other products and services which we feel will provide more value to our customers.’