Withdrawing Money from ISAs

In most circumstances, you can withdraw money from your ISA. 

You can take money out of Easy Access, Instant Access, and Notice ISAs at any time without a fee. You may have to wait for a notice period or withdrawal turnaround times to receive your funds. Your account holder will specify this in your original agreement. 

If you have a Fixed Term ISA, you can still withdraw money before your agreed term ends. However, you will likely be liable for an early withdrawal charge. 

Lifetime ISA 

One ISA that you cannot usually take money out of is the Lifetime ISA. With a Lifetime ISA, you can only withdraw from it without incurring any fees if you’re: 

1. Using the funds to buy your first home (up to the value of £450,000) 
2. Have turned 60 
3. Terminally ill and have less than 12 months to live.  

Withdrawals or transfers to another type of ISA outside of this are subject to a 25% charge. For more information visit  GOV.UK. Please note, at Shawbrook we don’t offer Lifetime ISAs. 

At Shawbrook, we offer Fixed Term and Easy Access Cash ISAs. 

It’s important to check the terms of your own ISAs to find out about your right to withdraw money or cash in your ISA at any time. 

Unless you undertake a transfer out to another provider, when you take money out of an ISA, you stop earning tax-free interest on the withdrawn amount. Every tax year, you have an Annual ISA Allowance, which for 2024/2025 is £20,000.  

Once you have deposited money within an ISA, it counts towards your Annual Allowance — even if you withdraw it within the same year (unless you have a flexible ISA).  

So, removing money from an ISA could prevent you from maximising your allowance. 

Let's say you deposited £15,000 in a new ISA in one tax year. If you withdrew £7,000, your balance would reduce to £8,000 but you would still have used £15,000 worth of your allowance.  

So, if you were to deposit another £7,000, you would then exhaust the £20,000 deposit limit, despite only having £8,000 saved at the end of the tax year. 

For more in-depth information, visit our Cash ISA Allowance for 2024/2025 page. 

Reducing tax efficiencies  

Unless you undertake a transfer, when you withdraw money from an ISA, you reduce the tax efficiencies of the annual deposit allowance. Withdrawing money from an ISA doesn’t just affect the interest earned in one year — it can limit your tax-free earnings on this sum for the entire duration of your ISA. 

Because of this, it’s worth considering the implications of taking money out of an ISA. If you have another savings account, you may choose to withdraw from this first so that your ISA funds can continue to earn tax-free interest for years to come. 

Transferring an ISA  

An ISA transfer allows you to move savings you have with one ISA provider to another – without losing any of your £20,000 tax-free allowance and maintain tax free status of money held in that account. 

If you’re looking to transfer your ISA to another provider, get in contact with your new ISA provider and they will be able to action it on your behalf. Different ISAs will have different withdrawal rules so make sure you check your account’s terms and conditions.

For more information, visit our Transferring an ISA to Shawbrook Bank page. 

The difference between withdrawing and transferring

Transferring from one ISA to another ISA ensures you maintain ISA tax-free status benefits. If you withdraw money from an ISA before placing it into another ISA, the money will lose its tax-free status, meaning that you reduce how much you can pay into an ISA during the tax year.  

This may even result in you exceeding your maximum annual allowance, meaning you would be unable to redeposit some or all the funds into an ISA during the current tax year.

For more information, visit our Depositing and Withdrawing Money page and Cash ISA Allowance for 2024/2025 page.

Withdrawing and redepositing money  

You'll need a Flexible Cash ISA to withdraw and redeposit money without affecting your Annual ISA Allowance. This works slightly differently and allows you to put money in and take money out without affecting your annual allowance. You’ll need to ensure any withdrawn deposits are replaced within the same tax year or it will fall outside the ISA tax wrapper.  

For example, if you withdraw on 1st April, it must be put back within 4 days by 5th April (end of the tax year). However, if you make a withdrawal on 7th April, you’ll have almost a full year to put it back depending on your needs. This might be a better choice for you, but we do not offer flexible ISAs at Shawbrook. 

Fixed Term ISA 

If you have a Fixed Term ISA, you'll need to wait until your agreed term is over before you can withdraw your money — otherwise you may be liable to pay an early exit charge. The cost of this will depend on your ISA provider and your initial agreement. 

You don’t need to pay tax when withdrawing money from an ISA. 

Withdrawals from an ISA do not count as taxable income. Any interest you earn within an ISA will remain tax-free, as long as you have never exceeded your annual deposit allowance. 

However, your money does lose its tax-free status once you withdraw it from an ISA. So, if you've exhausted your annual ISA Allowance, you won't be able to redeposit it in another one.  

You may need to pay tax on any earnings if you place it in another type of savings account (depending on your other allowances and how much you earn). 

If you're considering withdrawing from one ISA account to save in another, you can protect your tax benefits by transferring your ISA instead. Different ISAs will have different withdrawal rules so make sure you check your account’s terms and conditions. 

Shawbrook currently provides two types of ISAs:

Fixed Rate Cash ISA 

Withdrawals are possible with a Fixed Rate Cash ISA before meeting the term, but this will be subject to an early exit charge.  

At Shawbrook, we charge a different early exit charge depending on the length of the original term. 

• 1 Year Fixed — subject to a loss of 90 days’ interest 
• 2 Year Fixed — subject to a loss of 180 days’ interest 
• 3 Year Fixed — subject to a loss of 270 days’ interest 
• 5 Year Fixed — subject to a loss of 360 days’ interest 
• 7 Year Fixed — subject to a loss of 360 days’ interest 

Easy Access Cash ISA 

There is no fee charged when withdrawing funds from a Shawbrook Easy Access Cash ISA. However, the account is subject to a minimum withdrawal amount of £500.  

At Shawbrook, we offer various Fixed Rate Cash ISAs with different term lengths and an Easy Access Cash ISA. 

We like to keep our savings simple and straightforward for our customers. We’re proud to say we’ve been awarded Best Cash ISA Provider and Best Variable Cash ISA Provider at the Savings Champion 2024 Awards, as well as the being named Best Cash ISA Provider at The Times Money Mentor Awards 2024. 

If you’re interested in opening an ISA with us, you can find out more about our accounts and the rates available on our Cash ISAs page.