My main concern is can I use it without any penalties that are added to holding a shield while casting spells, such an item would become more cumbersome than a weapon when casting but does the animated shield circumvent this?
Animated Shield (DMG, p. 151, emphasis mine):
The shield leaps into the air and hovers in your space to protect you as if you were wielding it, leaving your hands free.
Note that the only strictures about armor (and shields) impeding casting are:
If a spell requires a somatic component, the caster must have free use of at least one hand to perform these gestures.
you must be proficient with the armor you are wearing to cast a spell.
(PHB, p. 201 and 203).
There aren't any penalties for spellcasting while wearing armor or holding a shield, in the sense of a reduction to a die roll. Either the spellcaster can cast the spell given its components, or they can't.
With the animated shield, you explicitly have one hand free, and thus can cast spells with somatic components.
Using a normal shield has two drawbacks regarding casting:
It occupies a hand and can be in the way of performing Somatic or Material components.
Counts as armor for the purposes of this rule:
If you wear armor that you lack proficiency with, you have disadvantage on any ability check, saving throw, or attack roll that involves Strength or Dexterity, and you can't cast spells. (PHB 144)
Using an Animated Shield obviously circumvents #1. However, it
hovers in your space to protect you as if you were wielding it (DMG 151)
So it is not obvious it negates #2. It would need a ruling from your DM. (Note: I would rule that you do not need proficiency to use it without penalties.)
As a paladin, you will have no problems anyway.