I'm an ISA newbie , please help

Cherryjack

Hello,

I wonder if you could help. I've read Martins post this evening about ISA's but i really need more help to get my head around it.
I currently have around £5000.00 in rental savings.. ready for the accountant to tax in april. So i guess i should put this into an ISA asap.. and then once the tax is worked out pay my tax bill out of my current wages? What i dont understand is if I dont will i loose much money? what happens each year? can i hold my Yearly ISA's with different banks.. how do they get moved.. do they get statements and how often? I think I will be saving the Max each year just from my property..
Also where is the best deal? Do i just go with my current bank?

Thanks so much for helping.. once ive learnt it I will be on my way :rotfl::beer::money:

Deru

Cherryjack wrote: »

Hello,

So i guess i should put this into an ISA asap.. and then once the tax is worked out pay my tax bill out of my current wages?

Yes, if you can cover the bill with the wages, then that sounds like the way to go. If possible, subscribe £5340 BEFORE April 6th. That's the cash allowance for the 2011/2012 tax year.

What i dont understand is if I dont will i loose much money? what happens each year?

You don't lose money as such but you lose the year's tax wrapper allowance so you'd be paying more tax. ISA's protect your savings from the tax man.

can i hold my Yearly ISA's with different banks..

Yes, but you can only subscribe to one ISA each tax year. As you're just starting one, I wouldn't worry about that yet...

how do they get moved..

You can transfer them from ISA to ISA (provided the new ones allow transfers in) by filling a form. This keeps the money's tax free status. (or you could withdraw provided it's not fixed but you lose the tax wrapper).

do they get statements and how often?

Can do... quarterly or annually I guess.

Also where is the best deal? Do i just go with my current bank?

Check this thread...

https://forums.moneysavingexpert.com/discussion/596727

Fixed Rate ones give better rates but what's best for you will depend on your circumstances. If you think you might need to withdraw the money for something any time soon or in case of emergency, then you're best going for Easy Access ones. Of course, you could use up the allowance and also build a separate savings pot in an Easy Access Savings account for a rainy day.

Once you withdraw from an ISA, you can't put that money back in.

i.e. 1. you pay in £5340
You withdraw £1000
You won't be able to put that £1000 back in until next year (using next year's allowance).

Next year's allowance is increasing.

Pentris

When you withdraw a Cash ISA do you pay tax on the interest gained over the life of the ISA. Newsletter today, 7th March item 3 seems to suggest tax is payable.

blueberrypie

No, you only pay tax on the interest gained from that point on (assuming you put it in an interest-earning account).

Vortigern

Pentris wrote: »

When you withdraw a Cash ISA do you pay tax on the interest gained over the life of the ISA. Newsletter today, 7th March item 3 seems to suggest tax is payable.

3. Once in, it stays tax-free YEAR AFTER YEAR. Once the money's in an ISA, you never pay tax on it, until it's withdrawn, so it's protected from tax long term.

No, you don't pay any tax when you withdraw from an ISA. I assume that what the newsletter is trying to say is that if you withdraw from the ISA and then invest the money outside of an ISA, tax will be payable on gains made after the withdrawal.

ISA providers always say "the tax free status of ISAs may change in the future" That would be up to the government of the day. I wonder what are the chances of HMG changing the rules?