What happens every year in April when an ISA matures

thebeak

Hello All,
I've searched online but they don't go into enough detail about this.

Say you invest £3000.00 in a cash only ISA, what happens come April? can you leave the money in the ISA and let it earn interest the following tax year? i.e. the original £3000.00 plus the interest? Or do you need to withdraw the interest out of it and start a new one for the next year at a maximum of £3000.00?

gt94sss2

thebeak wrote: »

Say you invest £3000.00 in a cash only ISA, what happens come April? can you leave the money in the ISA and let it earn interest the following tax year? i.e. the original £3000.00 plus the interest?

Yes.

You can also place another £3,000 in the account as well (or in a different cash ISA) - for that years allowance (its actually going up to £3,600 next year)

Regards
Sunil

thebeak

So say year 1 you put in £3,000.00 + 5.5% fixed AER interest = £3150.00 April - April

So going on that example you could have your £3150.00 + new £3000.00 = £6150.00 to put in at the start of year 2 ???

How many years can this go on for? Is there an upper limit?

LittleVoice

For as long as ISAs are available (so therefore indefinitely at the moment really), you will be able to add the then current maximum to an account and leave the interest in. (Unless the institution itself closes the accounts to new contributions.)

caliston

It'll keep on for as many years as the Chancellor allows it. Last time there was a change in the system (froms TESSAs to ISAs in 1998) you kept all your existing money but couldn't invest any new money into existing TESSAs. But you could take out an ISA instead. You're allowed to transfer ISAs between providers at any time (and can still transfer old TESSAs too).

thebeak

This sounds good to me......

Am I missing something? how come this is not publicised, the fact that you can build up a fairly substancial tax free savings allowance over the space of a few years?? Nothing is mentioned about this. Thank you for the replys

CLAPTON

thebeak wrote: »

So say year 1 you put in £3,000.00 + 5.5% fixed AER interest = £3150.00 April - April

So going on that example you could have your £3150.00 + new £3000.00 = £6150.00 to put in at the start of year 2 ???

How many years can this go on for? Is there an upper limit?

just to be clear

after the first year you can have 3150 in your origial ISA earning interest tax free
and
a. you can add a further 3000 if you like so you now have 6150 earning save free interest
or
b you can open a new ISA with your 3000 so you have two ISAs both earning tax free interest
or
c. you can open a new ISA with 3,000 and transfer the old one there if your ISA provider allows it (some do some dont)

but anyway you can get more than 5.5% if you look around

save-a-lot

Hi

Is that true then £3600 (as posted above) will be the ISA allowance next year? I ask because we have just creamed off £6K from a matured bond to put into 2 ISAs next year, as this years allowance is fully used. We should have taken £7200 then... damn it as the remaining balance has been locked into a follow on 1 year bond. Ah well, I need to save up £1200 extra for next years allowances then.

gt94sss2

save-a-lot wrote: »

Is that true then £3600 (as posted above) will be the ISA allowance next year?

Yes, the ISA rules are changing from 6 April 2008.

If you are only interested in Cash ISAs the limit is increasing to £3,600.

Regards
Sunil

influence

Any change to the Maxi ISA for investment? Does it keep at 7000?

[Deleted User]

Hi,

Maxi ISA goes up to £7200, look.