Some questions about ISA's

JohanDij

Hi,

I had some questions about ISA's:

-Do you need to open one every year? Or can you always use the same one?

-What happens to the money of last year's ISA? Will you still get interest over it or not?

Thanks,

Johandij

Lokolo

Yes you can use the same ISA if you want. You can open a new one if you prefer. You can also open a new one elsewhere and then transfer the old one into it. (to get better rates etc.)

The old money still earns tax free interest :beer:

JohanDij

Ok, another question:

About ISA's I read the following:

"Never, ever, ever, ever withdraw money from a cash ISA!
You'll immediately lose all the tax benefits."

But, on the same page, I read:

"A common mistake is to think an ISA needs to be held for a set length of time in order to reap the tax-free benefits. Luckily, that's wrong! Providing the rules of the individual product allow it (there's loads that do!), you can have full, instant access to your money without losing the tax benefits on the rest of your savings in the wrapper."

Isn't that a contradiction?

Also, am I right to think that the top regular saver ISA's (e.g. First Direct and Principability) are the best ones to go for (more return) ?

Thanks,
Johandij

Aegis

JohanDij wrote: »

Ok, another question:

About ISA's I read the following:

"Never, ever, ever, ever withdraw money from a cash ISA!
You'll immediately lose all the tax benefits."

But, on the same page, I read:

"A common mistake is to think an ISA needs to be held for a set length of time in order to reap the tax-free benefits. Luckily, that's wrong! Providing the rules of the individual product allow it (there's loads that do!), you can have full, instant access to your money without losing the tax benefits on the rest of your savings in the wrapper."

Isn't that a contradiction?

Also, am I right to think that the top regular saver ISA's (e.g. First Direct and Principability) are the best ones to go for (more return) ?

Thanks,
Johandij

The first one is a rule of thumb. It should come with the qualifier "if you have other instant access cash that you can use instead".

Lokolo

It just means withdrawing your money won't take the tax free status off of the whole money. But its best, if you can, not to take money out. Example, you put £3,600 in this tax year, you take £2,000 out of it 6 months later. 2 months later you get £2,000 from job or whatever, you then cannot put this £2,000 in, so at the end of the tax year you only actually have £1,600 in and the £2,000 you have now has to go into a savings account where the interest is taxed.

Over 10 years this could add up, say you withdraw add money ISA etc.etc. and it averages out to mean you have only got £2,000 per year. Over 10 years that means you will have £20k, whereas if you keep it in there you have £36k at least.

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Regular ISAs are good if you don't have lump sums.

debjay

Another question:

I had a dd set up into my A and L ISA which I thought I had stopped after the March payment. However a payment went in today. Does that mean I am tied to A and L for this tax year now?

Lokolo

Yes.

You can try and find a better paying ISA which allows transfers in, then transfer the whole amount, you can then deposit the rest of your allowance into that ISA.