You can withdraw savings from your ISA and return them in the same tax year without losing your annual allowance.
This is because your Freetrade ISA is flexible.
When you withdraw from a flexible ISA, your withdrawal will be added back to your annual allowance first (assuming you’ve made contributions in the current tax year). Any withdrawals exceeding your current year’s contributions are displayed as “flexible withdrawals” in your app.
Example: You have £50,000 in your ISA from previous tax years and have topped up your ISA with £20,000 in the current tax year. You withdraw £30,000.
If your ISA is not flexible, you won’t be able to make any further top-ups into any ISA for the remainder of the tax year. This is because you’ve used your £20,000 annual allowance, and any withdrawals won’t be added back to your annual allowance. In effect, you’ve lost your full £20,000 annual allowance for the year.
The Freetrade ISA is flexible, so you can put the full £30,000 back before the end of tax year. The first £10,000 returned will fill your flexible withdrawal balance, and the remaining £20,000 will fill your current year’s annual allowance.
After you’ve made a withdrawal, any top-ups you make will fill your annual allowance first. Your flexible withdrawal balance will be filled second.
Both your annual allowance and your flexible withdrawal balance expire at the end of each tax year (5 April at midnight).