ISA confusion

Mrs_Rachel_Trelfa

Hi all

Been a bit of a general lurker on this website but feel that I need some clarification on ISA's and I'm hoping you guys can help.I already feel a bit stupid about the fact that I should really know the answer so please be gentle.

I know that you can save so much a year in an ISA currently at 5 thousand 7 hundred and something I believe? And I think I am right in thinking that if you were to put £4K in and then take £1k out (so you only have £3k in there), you cannot put in £2k back in during the same year as this takes you over the tac free limit. What I am unsure about is that if you put the full amount in for your first year, do you put the full amount in during the second year tax free or will you get taxed on the amout above the limit? Or do you need a separate account once the limit has been reached?

Sorry if it'd a dumb question, I feel the banks and government have hadh of my money so I have decided that I'm taking charge and have my money work for me and not the greedy banks.

dunstonh

I know that you can save so much a year in an ISA currently at 5 thousand 7 hundred and something I believe?

The ISA contribution allowance is £11,520 of which a maximum of £5760 can be placed into cash.

And I think I am right in thinking that if you were to put £4K in and then take £1k out (so you only have £3k in there), you cannot put in £2k back in during the same year as this takes you over the tac free limit.

Correct. It is a contribution limit per tax year. Withdrawals do not give you any allowance back.

What I am unsure about is that if you put the full amount in for your first year, do you put the full amount in during the second year tax free or will you get taxed on the amout above the limit? Or do you need a separate account once the limit has been reached?

It is an annual contribution limit. Not a maximum balance. You can invest £11520 a year every year if you want.

Mrs_Rachel_Trelfa

Thanks dunstonh. I am just looking at the cash element as I unfortunately do not have a spare £11k lol. So I can put in £5760 in one year and it will be tax free and then put in the same again next year and continue like that, and it will all be tax free? Also is it just one ISA per person, so I could have one and the hubby have one and we can save £11,520 between us? Sorry if I am being a bit thick.

dunstonh

On the 6th April each year your ISA contribution allowance resets. This is why you see people with hundreds of thousands of pounds in ISAs (as they have contributed using each years allowance).

The ISA is an individual allowance. It is per NI number effectively. So, you can both have one.

slenderkitten

a i right in thinking that i can open more than one cash isa in different banks?

Gizmo247

You can open as many ISAs as you like in a year with zero balance but you can only pay into one in that tax year.

AndyPK

you and the wife can have your own ISA's. SO £5760 each.

What happens in the second year can vary at that point in time.

You may want to put your 2nd years 5760 with another provider with a better interest rate.

You may want to transfer year 1's money to the new provider if they allow transfers in.

It maybe possible to add to the existing ISA.

Vortigern

AndyPK wrote: »

You may want to put your 2nd years 5760 ...

Next year's allowance could be more than £5760 (or less)
The allowance has tended to increase over time, but there's no guarantee that it will continue to increase.

thenudeone

There is no limit to the number of Cash ISA accounts you can have, the number of banks they are with, or the maximum balance.

It is perfectly possible to have a small balance in an ISA account with every bank and building society in the country, if you really wanted to.

The government limits are:
-New money (excluding transfers and interest) mustn't exceed £5760 in this tax year
-you can only contribute new money into one ISA in each tax year, although you can transfer a current year ISA in full during the current tax year and continue to use any remaining allowance with your new provider

Apart from that, you can do whatever your provider's terms and conditions allow you to.

hotyogabunny

So if I have this year's ISA full with new money what can I do with last year's ISA which is now down to some sort of miserable rate? This thread has been very helpful thanks!

ViolaLass

Mrs_Rachel_Trelfa wrote: »

I feel the banks and government have had of my money so I have decided that I'm taking charge and have my money work for me and not the greedy banks.

By putting it in the bank...

Not saying you shouldn't put it in an ISA, by the way, just wondering how this stops your money working for the bank as well as you.