ISA Query

PeterJames66

Hi. I currently have £20,645.67 in my Virgin cash ISA. It is saying in a window on my account page that I have  £20,000 of my allowance to use by 5th April? I thought 20K was the max and that the £645.67 over this would be taxable at my personal tax allowance rate if my total savings were over £1000? Anything else I need to point out?

eskbanker

PeterJames66 said:

Hi. I currently have £20,645.67 in my Virgin cash ISA. It is saying in a window on my account page that I have  £20,000 of my allowance to use by 5th April? I thought 20K was the max and that the £645.67 over this would be taxable at my personal tax allowance rate if my total savings were over £1000? Anything else I need to point out?

The annual ISA contribution allowance is £20K but it isn't a cap on balances, which remain entirely tax-free.

PeterJames66

Ok. I see now. Thanks

PeterJames66

Sorry. I have another question. Could I leave this as is, and use my allowance to open another Cash ISA with a different provider? Or can I only have one ISA savings account. Apologies for the thickie question   

eskbanker

PeterJames66 said:

Sorry. I have another question. Could I leave this as is, and use my allowance to open another Cash ISA with a different provider? Or can I only have one ISA savings account. Apologies for the thickie question   

If your current ISA only has money from a previous tax year then you're free to pay new money into a different one if you wish.

The current rule is that you can only pay new money into one cash ISA in any tax year, but this rule is abolished from 6 April....

PeterJames66

eskbanker said:

PeterJames66 said:

Sorry. I have another question. Could I leave this as is, and use my allowance to open another Cash ISA with a different provider? Or can I only have one ISA savings account. Apologies for the thickie question   

If your current ISA only has money from a previous tax year then you're free to pay new money into a different one if you wish.

The current rule is that you can only pay new money into one cash ISA in any tax year, but this rule is abolished from 6 April....

Great. Cheers

PeterJames66

PeterJames66 said:

eskbanker said:

PeterJames66 said:

Sorry. I have another question. Could I leave this as is, and use my allowance to open another Cash ISA with a different provider? Or can I only have one ISA savings account. Apologies for the thickie question   

If your current ISA only has money from a previous tax year then you're free to pay new money into a different one if you wish.

The current rule is that you can only pay new money into one cash ISA in any tax year, but this rule is abolished from 6 April....

Great. Cheers

What happens if I contribute over 20k. What I mean is. Within the tax year, if I have an easy access cash ISA with 20k in it and I withdraw 5k. Can I only put 5k back in? What would happen if I put in 6k? Would the 1k over the allowance be rejected ?

eskbanker

PeterJames66 said:

PeterJames66 said:

eskbanker said:

PeterJames66 said:

Sorry. I have another question. Could I leave this as is, and use my allowance to open another Cash ISA with a different provider? Or can I only have one ISA savings account. Apologies for the thickie question   

If your current ISA only has money from a previous tax year then you're free to pay new money into a different one if you wish.

The current rule is that you can only pay new money into one cash ISA in any tax year, but this rule is abolished from 6 April....

Great. Cheers

What happens if I contribute over 20k. What I mean is. Within the tax year, if I have an easy access cash ISA with 20k in it and I withdraw 5k. Can I only put 5k back in? What would happen if I put in 6k? Would the 1k over the allowance be rejected ?

If you pay £20K of new money into an ISA and then withdraw £5K, then whether or not you can pay any back in depends on whether or not the ISA is flexible.  If it isn't then you have no remaining allowance so can't pay anything back in, but if it is flexible then you can pay all £5K back in - in either case, your provider will probably prevent any attempt to break the rules, by tracking your remaining allowance and ensuring that it isn't breached.

PeterJames66

eskbanker said:

PeterJames66 said:

PeterJames66 said:

eskbanker said:

PeterJames66 said:

Sorry. I have another question. Could I leave this as is, and use my allowance to open another Cash ISA with a different provider? Or can I only have one ISA savings account. Apologies for the thickie question   

If your current ISA only has money from a previous tax year then you're free to pay new money into a different one if you wish.

The current rule is that you can only pay new money into one cash ISA in any tax year, but this rule is abolished from 6 April....

Great. Cheers

What happens if I contribute over 20k. What I mean is. Within the tax year, if I have an easy access cash ISA with 20k in it and I withdraw 5k. Can I only put 5k back in? What would happen if I put in 6k? Would the 1k over the allowance be rejected ?

If you pay £20K of new money into an ISA and then withdraw £5K, then whether or not you can pay any back in depends on whether or not the ISA is flexible.  If it isn't then you have no remaining allowance so can't pay anything back in, but if it is flexible then you can pay all £5K back in - in either case, your provider will probably prevent any attempt to break the rules, by tracking your remaining allowance and ensuring that it isn't breached.

Perfect. Thanks!