In times of uncertainty, we all want to be prepared for the unexpected.

But sometimes it can be difficult to be flexible with your savings. Products like fixed-rate savings accounts often require a minimum investment period, and it can be difficult to withdraw money from your ISA without affecting your annual ISA allowance.

To offer our customers more flexibility with their money, Sheffield Mutual are pleased to announce the launch of our new ‘My ISA’.

What Is ‘My ISA’?

My ISA is a new financial product that allows customers to withdraw money from their ISA and add the money back in within a single tax year, all without affecting their annual ISA allowance.

How Do Traditional ISA Limits Work?

With more traditional ISAs, withdrawing money can be complicated. For example, if you put £10,000 into a traditional ISA, this would use up £10,000 of your annual £20,000 allowance.

But due to an emergency, you need short-term access to £5,000. You withdraw this money from your ISA with the intention of putting it back when you no longer need it.

After the emergency has passed, you add that £5,000 back into your ISA account. At this point, you have only added £10,000 to your ISA in real terms, but you have used £15,000 of your annual ISA allowance (£10,000 for the initial deposit and £5,000 for re-adding the amount you previously withdrew).

How Does My ISA Work?

With Flexible ISA rules, My ISA allows savers to be a little more flexible with their approach to money.

Consider the same example: £10,000 is invested at the beginning of the tax year, £5,000 is withdrawn as cash to cover an emergency, and then re-added in the same tax year.

With a traditional ISA, a saver would have used £15,000 of their annual ISA allowance. In line with My ISA rules, a saver would have used only £10,000 of their allowance, as the money was withdrawn from and re-added to the same account within the same tax year, protecting an additional £5,000 of their annual allowance.

How Does Sheffield Mutual’s My ISA Work?

My ISAs are a fantastic way for members to build up their savings while retaining access to their cash. Although building a rainy day fund is a great way to help cover emergencies, we can’t always be sure how much money we will need to access.

A My ISA gives customers the peace of mind that short-term changes in circumstances don’t have to affect their long-term savings strategy.

In addition to the product's flexibility, My ISA members may also receive annual bonuses from our with-profits fund. Bonuses can allow Sheffield Mutual members the opportunity to grow their savings even further, although they are not guaranteed.

Can I Take An Income From My ISA?

In addition to having flexible access to your ISA savings, My ISA also allows members to take regular income from their ISA, as long as they meet the following criteria:

• Income withdrawals must be a minimum of £50
• Income withdrawals can be taken monthly, quarterly, half-yearly or annually
• Income withdrawals can be stopped, started or adjusted as long as the policy is active or until the account is depleted

It is also important to understand that any initial income withdrawal will be taken from the cash investment. However, if this investment is depleted, income can still be derived from any bonuses paid.

Finally, it is critical to understand that if the policy value drops below £500 following an income withdrawal, it may trigger an automatic policy surrender.

What Is The ‘Builder Feature’ of My ISA? 

As part of our new My ISA, we are finding new ways to help you build your savings over time. With our ISA builder, you can increase your savings to gradually help them grow, without the need for a large upfront commitment. 

For example, if you started saving £50 a month, and increased each monthly payment by £10 every year, by year 10 you would have a savings amount of £140 a month. This could mean that you could save £11,400 in total over 10 years. If you decided to keep your savings at £50 a month, you would be saving £6,000 over the same period. 

This would be a great way to include any payment increases from pay rises, etc, to get the most use out of your money. 

How Much Can I Save In My ISA?

As with most other types of ISA, members can choose to save monthly, save in lump sums, or choose a combination that works best for them.

However, there are some limits to consider when formulating a savings strategy.

The largest lump sum deposit possible is £20,000, effectively utilising the entirety of a member’s annual allowance, and the minimum amount accepted as a lump sum is £500.

For regular monthly payments, the minimum monthly payment is £50, whereas the maximum monthly payment is £1,666.66. 

Please note: 12 payments of the maximum contribution take the total to the £20,000 annual limit, meaning savers would not be able to contribute to any other ISAs during a tax year in which they have made the maximum monthly contributions. You can, however, transfer an existing ISA from another provider or from another Sheffield Mutual ISA up to £150,000.

Discover A Flexible Stocks And Shares ISA At Sheffield Mutual

At Sheffield Mutual, our products are designed to give our customers the flexibility to make the best financial choices for their needs.

That’s why we’re proud to offer a product that allows members to access their money without impacting their long-term financial planning. However, as this is an investment product, your capital is at risk and, in certain market conditions, you may receive back less than the amount you invested.

But that doesn’t mean there isn’t a place for traditional ISAs in a modern savings strategy. Browse our range of ISAs, including our Sustainable ISA and Junior Sustainable ISA, to discover a new way of investing that suits your needs.

If you aren’t sure where to start, consider using our product selector to find savings products that align with your goals. Alternatively, contact us and the team will be happy to explain your options and answer any questions you may have.

This article provides generic information and the writer's opinions and should not be relied upon for investment decisions. Sheffield Mutual has provided no advice. If you doubt whether a savings or investment plan suits you, consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk or www.vouchedfor.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand.