adding money to ISA's every year

satish_141

Hi,

I am new to these ISA. Apologies if I am asking the same question which was asked before. But please answer my doubts.

This year for the first time I have opened a new direct ISA for £3000 with alliance leicester. so, for this year I am going to get interest on £3000. Next year lets say I can put another £3000. so this should bring the entire ISA amount to £6000. So next year will I be paid tax free interest on the entire amount £6000 or only for the £3000 allownace for that year? If that is the not the case then how much interest will be paid to the old £3000 which is added this year ? I hope my doubt is clear. Please help me understand how these ISAa work. Help in the matter is greatly appreciated.

Regards,

Satish

jimclark1967

£3000 from each year will earn tax free interest for as long as it stays in an ISA, at least for another 5 years. So you can pay in up to £3000 each year but earn tax free interest on the entire balance :j

Murtle

yup...you get an allowance EACH year.
So if you paid in £3000 last tax year, that will continue to earn tax free interest until you take it out (once you have taken it out you CANNOT replace it).
You can place £3000 into another cash ISA this tax year.

Interest on the ISA's will change and they can be TRANSFERRED to another one, watch out for transfer fees and make sure you DON'T remove the money only transfer it to the new one.

Hope that helps

satish_141

Thanks a lot for the quick answers guys ! I think this looks to me like its great idea to invest in ISA's. I will apply for one on my wife's name as well for this year!