ISA?

V3cash

Right so I understand ISA allowance is 20k per person per year but what I don’t understand is about subsequent years.
is isa 1 (say 2025) still tax free ongoing in subsequent years if you then have isa2 in 2026, and so on?

XzavierWalnut

Yes all money in ISAs continue to be tax free.

Ayr_Rage

@V3cash and don't forget it's tax years, not calendar years.

I know I am stating the obvious but some seem to get confused, dates in 2025 and 2026 could be in the same tax year!

Section62

V3cash said:

Right so I understand ISA allowance is 20k per person per year but what I don’t understand is about subsequent years.
is isa 1 (say 2025) still tax free ongoing in subsequent years if you then have isa2 in 2026, and so on?

Yes... provided you keep it in an ISA, or make use of the flexible ISA rules. 

The flexible ISA rules mean you can withdraw and replace money in the same flexible ISA within the same tax year to roll the ISA wrapper into the next tax year.

For example, you deposit £20k in ISA 1 in 2024/25.  In 2025/26 you deposit £20k in ISA 2, but you withdraw £5k from ISA 1.  So long as you put the £5k back into ISA 1 before the end of 2025/26 you will finish the tax year with a total ISA wrapper of £40k. Earnings on the money are only tax free whilst they are in the ISA.

You can also transfer between ISA accounts, although the rules and process needs to be followed carefully.  For example you could open ISA 2 in 2025/26 and then ask the provider of ISA 2 to arrange a transfer from ISA 1 into ISA 2.  In that way ISA 2 could hold up to £40k in 2025/26.

It is easier than it sounds, you just need to make sure you understand and follow the rules.

V3cash

Ayr_Rage said:

@V3cash and don't forget it's tax years, not calendar years.

I know I am stating the obvious but some seem to get confused, dates in 2025 and 2026 could be in the same tax year!

I did mean seperate tax years 👍

Qyburn

V3cash said:

Right so I understand ISA allowance is 20k per person per year but what I don’t understand is about subsequent years.
is isa 1 (say 2025) still tax free ongoing in subsequent years if you then have isa2 in 2026, and so on?

Yes, but you don't necessarily need to open a new ISA each tax year. Unless there are restrictions, you can keep paying into the same account year after year.

maman

Qyburn said

Yes, but you don't necessarily need to open a new ISA each tax year. Unless there are restrictions, you can keep paying into the same account year after year.

You can stay with your existing provider but it's best to shop around and find the best deal each year to see how it compares.

We don't yet know what the rules will be from April 2025. 

Qyburn

maman said:

You can stay with your existing provider but it's best to shop around and find the best deal each year to see how it compares.

That's a different consideration, you don't have to open a new ISA, but if it's beneficial to do so you'd probably want to transfer everything into the new account.

That's not a tax year consideration, it might apply at any time. Not really an argument for having a separate account for each tax year.

Albermarle

V3cash said:

Right so I understand ISA allowance is 20k per person per year but what I don’t understand is about subsequent years.
is isa 1 (say 2025) still tax free ongoing in subsequent years if you then have isa2 in 2026, and so on?

OP - There is a a specific sub forum for ISAs. If you read through it you will see lots of info about ISA rules.
ISAs & tax-free savings — MoneySavingExpert Forum