Yearly ISA Allowances

sid34

Sorry for this really dumb question - I'm sure the answer is simple but it's just something I'm not clear on.
I'm just trying to get the information on a position similar to one like the scenario below:

In tax year 1 - I invest £15,000 in a stocks and shares ISA
In tax year 2 -  I invest a different £15,000 in a different stocks and shares ISA and leave my investment from tax year 1 untouched.

If in the future, my £15k investment from tax year 1 is now worth £20k - if I now decided to sell, is my £5k profit still exempt from tax because it was originally invested in an ISA?

Thanks in advance

eskbanker

Yes, gains made within an ISA aren't taxable.  The annual contribution limit is £20K anyway....

sid34

Thanks

So if I don't touch that investment I made in tax year 1 for 15 years - and (for example) it's grows and is worth £65k - I can still sell and not pay any tax on that £65k?

grumiofoundation

sid34 said:

Thanks

So if I don't touch that investment I made in tax year 1 for 15 years - and (for example) it's grows and is worth £65k - I can still sell and not pay any tax on that £65k?

Yes see response above.

sid34

Ok - thanks guys - I think I'm just overcomplicating things in my mind!
So I could have £100k in 5 separate ISAs from 5 separate tax years and not pay tax on any of the gains as long as the max invested in any year was £20k? (assuming £20k was always the ISA limit)

Alexland

Yes, that's right.

eskbanker

sid34 said:

So I could have £100k in 5 separate ISAs from 5 separate tax years....

Just in case of any more overcomplicating or misunderstanding, it's not necessary to use separate ISAs per tax year, i.e. you can keep feeding the same one from one year to the next.  There are some scenarios under which investors might choose to use different ISAs but it would be an unusual plan for someone starting out and getting to grips with the concepts....

sid34

I think thats where I've got confused - I've invested in the same fund through an ISA for the past few years but there didn't seem any separation of tax years in the total fund value. But I suppose that's irrelevant if you stay below the max investment levels.
I think I got confused thinking you could only have £20k in total in all your yearly ISAs combined.
Thanks for the replies.

Alexland

Its worth remembering the annual limit is on contributions of new cash into the ISA account. You can buy and sell investments within the account with no impact to your ISA allowance.

kmcatherall

I did not know this!!