Paying into a stocks and shares ISA query

corum_uk67

Hi,

So I've opened my first one of these today but would like to know the following.

There is a £20k annual limit. Does this relate to the cash that can be paid into the account or the value of stocks that can be purchased within the year?

For instance if I pay £20k in but then leave it as cash until next April, then pay another £10k in and buy £30k of shares, is that ok?

Alistair31

Yes, that is ok.

Voyager2002

The £20K is the amount that you are allowed to pay in during each financial year.

Eco_Miser

It's £20k per year paid in - not including any interest or dividends received, or any increase in value.
So leaving £20k in cash until next financial year then adding more and buying £30k or even £40k of stocks or funds is fine according to the rules.
I've put £20k in in March and more in April then spent the whole lot in one go myself, but why would you leave £20k uninvested and earning little if any interest for over four months?

corum_uk67

Thanks all, that makes sense.
Good to know that dividends paid into the account are not counted as part of the allowance as well.

capital0ne

Think of an ISA as box (that's why it's sometimes called a wrapper)

You can only put in £20k per tax year (already mentioned above).

Whatever happens inside that box is has no affect to things outside of it. Even the taxman doesn't want to know!

If the contents of that box increase to £30k then well done!

If it drops to £10k then hard luck but you can't add another £10k to take it back to £20k.

You can add another £20k to the box in the next tax year - that's your ISA allowance.

Good luck

Chino

Voyager2002 wrote: »

The £20K is the amount that you are allowed to pay in during each financial year.

capital0ne wrote: »

You can only put in £20k per tax year (already mentioned above).

Not quite true if the ISA is a flexible ISA:
https://www.moneysavingexpert.com/savings/flexible-ISAs/

With a flexible ISA, an investor could put in £20k, withdraw £10k then put in £10k again. So, over the tax year, the investor has cumulatively put in £30k although the net investment is £20k.

https://www.gov.uk/individual-savings-accounts/withdrawing-your-money