Questions about tax year allowances and re-investing money from within an old ISA

sarah748

Hi,

I have just opened my first Stocks & Shares ISA today and there is one assumption I am making I want to make sure I’m not wrong about.

Let’s say I open Stocks & Shares ISA (Account A) today, February 2021. I pay money into that ISA until the end of this tax year 20/21.

In the new tax year 21/22, I open another Stocks & Shares ISA (Account B ). I start paying money into that ISA so B is now my “active” ISA for that year. I do not pay any external money in to Account A.

Meanwhile, let’s say I accrue some holdings as cash in Account A over the tax year 21/22. (I’m a newbie, so might be wrong, but I understand dividends/gains etc. may be paid as cash from investments and held within the ISA).

My assumption is, using only the cash I have accrued in Account A, to invest in any fund in Account A in tax/year 21/22, would be allowed and would not count towards my 21/22 20K contributions allowance? And would also not account as A being my “active” ISA for the year (that would still be B ), as I haven’t directly paid any cash IN to the account? So I'm fine to move funds around within ISA A, even many years after I have paid money into it and regardless of any other active ISAs I have?

Is that correct? Thank you!

sarah748

Sorry, it seems to have inserted sunglasses emojis where I have written B followed by a closing bracket ) ...! Can't see an edit button, how annoying!

Vortigern

What you are suggesting is permitted. The allowance refers only to adding new money to an ISA, not to reinvesting dividends or to selling a holding to reinvest in another.  However you don't need to open a new ISA each year. You can just add next year's allowance to this year's ISA.

There should be a cog wheel at the top right of your post - for editing out the sunglasses.

sarah748

Vortigern said:

What you are suggesting is permitted. The allowance refers only to adding new money to an ISA, not to reinvesting dividends or to selling a holding to reinvest in another.  However you don't need to open a new ISA each year. You can just add next year's allowance to this year's ISA.

There should be a cog wheel at the top right of your post - for editing out the sunglasses.

Thank you for confirming! I was wondering about selling investments in one fund to invest in another fund too and I assume that is covered by your "selling a holding to reinvest in another"!
I have scoured the entire post and I can't see a cog wheel anywhere (and I am a website developer so I would hope that if it was there, I would be able to find it...!) Maybe it's because my account doesn't have enough reputation to edit posts or something... all I can see is Report, Thanks and Quote. sigh

grumiofoundation

As above fund changes within same ISA is fine. Only restrictions are with adding new money.

have made the not B ) mistake too! The cog is on the top right of your post.

Edited: See screenshot below

Albermarle

If you scroll down through this section of the forum , you will see a lot of similar/identical questions and the answers.
So probably worth a look.