ISA a stupic question

choidivision

I was under the impression that it is possible to open a new mini cash ISA every tax year meaning whilst I can only put £3000 away in a single tax year I’d be able to open a new ISA the following tax year and save a further £3000

Is this the case or am I silly?

Aegis

Yes, that sounds right. Of course, the rules change next year which will confuse everyone.

Don't forget that you have a £4000 Stocks and Shares portion of your ISA allowance this year too.

choidivision

so each year i can put away another £3000, say i put away £3000 this year and open a new ISA leaving my existing one max'd out, i out a further £3000 into the new ISA. do i earn tax free interest on both accounts?

Aegis

You can make a maximum deposit of £3000 to cash ISAs each year. If you've already put £3000 into an ISA this year, I don't think you can actually open another ISA, and will not get any tax breaks on it if you do manage to get money into it. You can open a new ISA and transfer an existing cash ISA to it if I remember my ISA rules correctly, but you absolutely cannot deposit more than £3000 per year into one.

The basic idea is that you can currently put £3000 of your cash into a tax-free savings account every year, and no more.

Of course, once the cash is in an ISA, it'll sit there in the tax-free wrapper earning interest until you withraw from it. The tax free status doesn't change when the year ends. For example, if I opened an ISA last year and deposited £3000, then this year I can deposit another £3000 into the same ISA or a new one, and would then have a total of £6000 plus interest stored in tax-free savings accounts.

Crabman

Brilliant explanation by Aegis

I'm pointing out the ISA article so you are fully aware of how these work, the 'wrapper' analogy is a good one:

The Best Mini-Cash ISA: A tax free savings account

choidivision

thanks alot guys. very helpful i'm getting to grips with all this and i've learnt so much this year