Freetrade launches flexible stocks and bonds Isa
Investors can now get a flexible stocks and bonds ISA from investment platform Freetrade
Free trade* has launched a flexible feature that allows investors to withdraw and redeem money without affecting their annual ISA allowance, as long as they redeem it in the same tax year.
Flexibility is a useful tax saving feature as it allows savers and investors to access and repay money without losing their savings. This feature is more common in cash ISAs.
Flexible Friend: Freetrade has launched the ability to withdraw and replace funds from a stocks and bonds ISA without affecting the annual allowance
If an investor needs to temporarily withdraw £5,000 from their stocks and bonds ISA and it wasn’t flexible, they will lose £5,000 of that year’s Isa exemption if they replace it.
But an investor who withdraws £5,000 from a flexible stocks and bonds ISA can still keep every penny of their £20,000 ISA exemption, as long as they top up the £5,000 they withdrew within the same tax year.
Viktor Nebehaj, CEO of Freetrade, said: ‘Life is unpredictable and large expenses can often catch us off guard. With a flexible Isa we give our customers the ability to meet these short-term needs, without sacrificing the long-term benefits of the Isa allowance.’
Of course, with a stocks and shares Isa, investors would be wise not to dip in and out of their pots too often. After all, a key element of stock market investing is keeping your money invested, so that it can grow and compound over the long term.
But with a flexible Isa, investors can keep the money they need invested and top it up later.
A flexible stocks and bonds ISA allows you to withdraw money for one-off large purchases or payments, such as a house deposit, home renovations, a big holiday or school fees, and then withdraw it again in the same tax year.
Simon Lambert of This is Money is an advocate of flexible ISAs, arguing that more savers and investors should consider the option and that more banks, building societies and investment platforms should offer flexibility.
There aren’t many investment platforms that offer flexible stocks and bonds ISAs, with major players Hargreaves Lansdown*, Interactive investor* And AJ Bell* don’t do that. But new Isa rules mean that investors can now open more than one Isa of the same type.
How does Freetrade’s Isa compare to other shares?
Free trade* has free stock trading and offers UK, European and US shares, ETFs and some investment trusts, but no investment funds. Freetrade’s Basic plan has no account fees, but those wanting a stocks and shares ISA will need to take the Standard plan at £5.99 per month. The Plus account costs £11.99 per month, which investors will need if they want a Sipp
Rival Trading 212* also offers a flexible Isa with fee-free stock trading, but charges no account fees for its stocks and shares Isa. While it has stocks, ETFs and investment trusts, like Freetrade it does not offer funds.
Charles Stanley Direct* has a flexible stocks and shares Isa and allows investors to hold shares, ETFs, investment trusts and funds. It has a 0.35 per cent account fee, which is waived for shares if a trade is made that month. Fund trading is free, but it costs £11.95 to buy and sell shares.
Best investment* also has a flexible Isa, offering shares, ETFs, investment trusts and funds with a 0.4 per cent account charge reduced to 0.2 per cent for its ready-made investment portfolios. Fund trading is free and stock trading costs £4.95.
> Read our full guide: How to choose the best stocks and bonds Isa
The rise of the flexible Isa
Freetrade said there is a strong demand for flexibility in a stocks and bonds Isa.
Flexible cash Isas have become more popular in the cash Isas market. Some of the best easy access cash Isas at the moment are flexible, for example Plums* 5.17 percent deal (this percentage decreases after four withdrawals), Potato chips* 5.1 percent cash Isa and Zopa’s 5.08 percent cash Isa.
A flexible Isa is more important than ever at a time when savers face a £10.4bn tax bill on savings interest.
When interest rates were low, interest rates on savings accounts were so low that the personal savings exemption provided most people with protection from tax on their interest.
But now that rates have risen and the personal savings allowance has become stuck at £1,000 for basic rate taxpayers and just £500 for higher rate taxpayers, it has become much easier to fall into the savings tax trap.
At a savings rate of 5 per cent, a basic rate taxpayer now needs just £20,000 in cash to exceed the exemption, while a higher rate taxpayer needs £10,000.
If you pay 45p tax you will not get any personal savings allowance at all.
DIY INVESTMENT PLATFORMS
AJ-Bel
AJ-Bel
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free Fund Trading and Investment Ideas
interactive investor
interactive investor
Fixed investment costs from £4.99 per month
eToro
eToro
Stock Investing: 30+ Million Community
Trading 212
Trading 212
Free stock trading and no account fees
Affiliate links: If you purchase a product, This is Money may earn a commission. These deals are chosen by our editorial team because we think they are worth highlighting. This does not affect our editorial independence.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free. We do not write articles to promote products. We do not allow commercial relationships to influence our editorial independence.