ISA Basics

FinanceMisery

I am new to ISA's and have a few basic questions that I hope someone will be able to answer for me.

I have opened and put £20k in a cash ISA for this tax year.

When it comes to the new tax year, I intend to put another £20k into an ISA.

Can I open another ISA account with another provider for subsequent years, or do I have to stick with my original ISA account and add to that?

And the other basic question - As the amount grows year on year if I keep going along these lines, do I get avoid paying tax on interest on the first £20k, then the next £20k etc. so in four years’ time I will have £80k which will never have the interest taxed as long as I leave them alone?

Lastly, if i leave the interest in the ISA's is that taxed?

FrugaiMacDugal

FinanceMisery said:

I am new to ISA's and have a few basic questions that I hope someone will be able to answer for me.

I have opened and put £20k in a cash ISA for this tax year.

When it comes to the new tax year, I intend to put another £20k into an ISA.

Can I open another ISA account with another provider for subsequent years, or do I have to stick with my original ISA account and add to that?

Yes you can choose a new provider each year.

And the other basic question - As the amount grows year on year if I keep going along these lines, do I get avoid paying tax on interest on the first £20k, then the next £20k etc. so in four years’ time I will have £80k which will never have the interest taxed as long as I leave them alone?

There is no tax on interest earned within an ISA, that's the whole idea of an ISA.

Lastly, if i leave the interest in the ISA's is that taxed?

There is no tax on interest earned within an ISA, that's the whole idea of an ISA.

 If you decide to transfer or amalgamate ISAs you must get new provider to initiate transfer to avoid losing tax free status.

Similar thread here.

victor2

More information here:
https://www.moneysavingexpert.com/savings/best-cash-isa/

Aretnap

FinanceMisery said:

Can I open another ISA account with another provider for subsequent years, or do I have to stick with my original ISA account and add to that?

You can have as many ISA accounts as you like, so long as you didn't subscribe (ie pay in) more than a total of £20,000 between them in any one tax year. 

You can also transfer money from one ISA to another, and it is good to do this occasionally as the account that has the best interest rate last year is unlikely to have the best rate next year. So long as you use the ISA transfer process (as opposed to withdrawing money to your current account then paying it into the new ISA), the money you transfer will not count towards the £20000 limit.

As the amount grows year on year if I keep going along these lines, do I get avoid paying tax on interest on the first £20k, then the next £20k etc. so in four years’ time I will have £80k which will never have the interest taxed as long as I leave them alone?

Lastly, if i leave the interest in the ISA's is that taxed?

Yes, so long as the money is left in an ISA and not withdrawn, interest remains tax free indefinitely. Interest paid within an ISA also doesn't count towards the £20000 subscription limit, so interest on interest is also tax free.

Albermarle

If you read through just the first few pages of the forum, you will find your basic questions answered.