S&S ISA Basic Question

Woolsy84

Apologies in advance for this being a basic question!
I would like to open a Stocks & Shares ISA. I have experience in Stocks & Shares but not in an ISA. If I wanted to put £20k into the S&S ISA.
If after the first year it manages to earn say 7% (£21,400), would you withdraw the £1400 and open a new S&S ISA for £20,000 for the second year?

eskbanker

It's up to you what you want to do with growth but there's no obvious reason to do what you describe!  There's no need to open additional ISAs in subsequent tax years, you can continue to fund the same one, so find one that meets your requirements and stick with it.

Woolsy84

Thanks for your reply. Just to confirm the growth has to been taken out but you don't need to transfer to a new ISA in year 2?

grumiofoundation

Woolsy84 said:

Thanks for your reply. Just to confirm the growth has to been taken out but you don't need to transfer to a new ISA in year 2?

The growth does not have to be taken out. 

Woolsy84

I'm assuming the growth of each year doesn't accumulate any further interest?

eskbanker

Woolsy84 said:

I'm assuming the growth of each year doesn't accumulate any further interest?

What interest?  Within a S&S ISA, you're buying investments such as shares or funds, and their value will fluctuate, but there's no interest involved.

grumiofoundation

Woolsy84 said:

I'm assuming the growth of each year doesn't accumulate any further interest?

The only limit to worry about is the contribution limit (currently 20000 per year across all 4 ISA types).

Once inside the ISA the money you have paid in can go up or down in value as much or as little as it wants and all of this money, including any gains, is still within the ISA. 

You in your example your gains of £1400 (assuming reinvested) would continue to grow within ISA.

As above - you aren't getting interest. Investments can go down as well as up!. 

Woolsy84

Thank you for all your replies, the penny has finally dropped!