Tax and ISAs - how to manage?

webminx

Hi all,
Have been following MSE for two years now - mostly lurking ;-) but always learning from all the great advice and inspiration on these boards. My DH and I have a cash isa each and an investment ISA each, which we opened last year. Neither are "full" but I am confused about how to ensure they are tax free. We are both higher rate tax payers. Is there a form a need to fill out and submit to tax office/bank?
Also, a stupid question, but one I'm still not clear on (!): if we fill up the ISAs annual allowance, can we open "new" ISAs for next year and get another year's allowance - i.e. each year, the ability to build up the max tax free savings and keep them tax free?
Thanks for any help you can provide and happy new year!
Best wishes,
webminx

Lokolo

1. The interest is just never taxed. In normal savings accounts the interest is taxed 20%. Then as a higher rate taxpayer you would have to pay more through tax return. In ISA it's never taxed in the first place.

2. You can fill up your ISA. Then each tax year you can choose to top up your ISA you already have, or you can open up a new one. When in ISA it always stays tax free.

webminx

thanks lokolo! Was worried there was some form I had to fill in that I was unaware of.

glider3560

Remember also that you don't need to declare interest from ISAs on your tax return (if you complete one).

zzzLazyDaisy

Just to add that each year, on 6th April, you each get a new ISA allowance.

For 6th April 2010 the cash ISA allowance will be £5100 each.

Primrose

That's one of the joys of ISAs - whether Cash or Equities. They're totally tax free and no matter how big a capital sum you build up, not a penny in interest has to be declared to the tax man. And if you cash them in and make a nice capital gain over time, that is totally tax free too.