Quick question first time ISA

bluesgirlvicki

Hi all,

I'm new to the world of ISAs and still learning so hope someone can answer my question. What I want to do is...

Save £400 a month for this year (as I'm saving for a holiday). I don't plan to take any money out this year so will be looking into some kind of fixed rate ISA for this year.

All I want to know is if I leave it in to the end of the tax year and take it out when the new tax year starts will that mean I'm taking out £4800 of the following year ISA allowance? So does the ISA I take out automatically continue in the new tax year?

david78

bluesgirlvicki wrote: »

,
Save £400 a month for this year (as I'm saving for a holiday). I don't plan to take any money out this year so will be looking into some kind of fixed rate ISA for this year.

I am not aware of a fixed rate ISA that accepts regular payments. Maybe consider a variable one.

bluesgirlvicki wrote: »

All I want to know is if I leave it in to the end of the tax year and take it out when the new tax year starts will that mean I'm taking out £4800 of the following year ISA allowance?

No.

bluesgirlvicki wrote: »

So does the ISA I take out automatically continue in the new tax year?

Yes, but only if you pay some more into it next tax year.

dzug1

Whenever you take the money out, if it's this year's money that's gone in it's this year's money that comes out.

If you keep on paying into it next year, then any money paid in that year would come off that year's allowance

david78

dzug1 wrote: »

Whenever you take the money out, if it's this year's money that's gone in it's this year's money that comes out.

:laugh: So funny ..

It doesn't matter whether its this year's or a past years' money that is being withdrawn. It doesn't effect the allowance in any way.

bluesgirlvicki

david78 wrote: »

:laugh: So funny ..

It doesn't matter whether its this year's or a past years' money that is being withdrawn. It doesn't effect the allowance in any way.

I was under the impression that if I took out say £1000 I would only be allowed to put in the allowance amount minus £1000?

Sorry as I said I am new to this so still learning here.

Thanks for your help

david78

Don't worry. Its confusing at first.

Lets suppose you put in £4800 between now and April 5 next year.

On April 6th you get a new allowance. We don't know what this is, but lets assume it is £5880.

If you take out your £4800 to pay for a holiday or whatever, you would still have a full £5880 allowance for use in 2014/2015.

jamesd

What you take out never affects how much you can put in.

If you put in £4,000 that's £4,000 of this year's allowance used. You have £7,200 of allowance left to use in this tax year. If the £4,000 was put into a cash ISA you have £1,760 of the cash portion left and can still put that into any ISA, cash or S&S, plus up to another £5.760 into a S&S ISA.

Say you took out £2,000. You couldn't then put all of that back into a cash ISA this tax year because you have only £1,760 left to pay in to cash ISAs this tax year. Whether you take out £2,000 or not doesn't affect this, you can still pay in £1,760.

Next tax year you have a new ISA allowance, I'll pretend it's the same as this year, £11,560 of which up to £5,760 can be into a cash ISA. If you wanted to take out £2,000 and pay it back in that'd use £2,000 of the allowance. Not because you took it out, but because of the paying back in part, all paying in counts as part of the allowance being used.