ISA Question

Ayr_Rage

You NEVER pay TAX on cash in an ISA, whatever the balance.

Don't overthink it.

badger09

himonster said:

Qyburn said:

himonster said:

If I'm saving £20k, and withdraw the interest earned each month but still keep £20k in the ISA, does this affect anything negatively?

No. But just to be clear it's perfectly OK for the balance to exceed £20k, you don't need to withdraw the interest unless you need it for something.

Thanks. Am I right in saying: 

My new ISA that I've just paid into for 2025/2026... At the end of the tax year on April 6th 2026, will I still not pay tax on interest in this account, even if it's sitting at £21k and still earning interest? 

In 2026, I can open another ISA and transfer this one and it still be exempt from tax as well as a new 2nd ISA account I open after 6th April 2026 with funds in?

Yes
You can pay max £20k into one or more ISAs each tax year (6 April - 5 April)
Interest on all money inside an ISA is tax free. 

If you want to move money in an ISA to a provider with a better rate, always use the new providers xfer process. That way you maintain the interest free status. If you simply take money out of an ISA and pay it into another, it counts towards your £20k annual allowance. 

himonster

badger09 said:

himonster said:

Qyburn said:

himonster said:

If I'm saving £20k, and withdraw the interest earned each month but still keep £20k in the ISA, does this affect anything negatively?

No. But just to be clear it's perfectly OK for the balance to exceed £20k, you don't need to withdraw the interest unless you need it for something.

Thanks. Am I right in saying: 

My new ISA that I've just paid into for 2025/2026... At the end of the tax year on April 6th 2026, will I still not pay tax on interest in this account, even if it's sitting at £21k and still earning interest? 

In 2026, I can open another ISA and transfer this one and it still be exempt from tax as well as a new 2nd ISA account I open after 6th April 2026 with funds in?

Yes
You can pay max £20k into one or more ISAs each tax year (6 April - 5 April)
Interest on all money inside an ISA is tax free. 

If you want to move money in an ISA to a provider with a better rate, always use the new providers xfer process. That way you maintain the interest free status. If you simply take money out of an ISA and pay it into another, it counts towards your £20k annual allowance. 

So I couldn't transfer it out and then open a new ISA and pay it in during this tax year? I'm still only having £20k in an ISA though?

friolento

himonster said:

badger09 said:

himonster said:

Qyburn said:

himonster said:

If I'm saving £20k, and withdraw the interest earned each month but still keep £20k in the ISA, does this affect anything negatively?

No. But just to be clear it's perfectly OK for the balance to exceed £20k, you don't need to withdraw the interest unless you need it for something.

Thanks. Am I right in saying: 

My new ISA that I've just paid into for 2025/2026... At the end of the tax year on April 6th 2026, will I still not pay tax on interest in this account, even if it's sitting at £21k and still earning interest? 

In 2026, I can open another ISA and transfer this one and it still be exempt from tax as well as a new 2nd ISA account I open after 6th April 2026 with funds in?

Yes
You can pay max £20k into one or more ISAs each tax year (6 April - 5 April)
Interest on all money inside an ISA is tax free. 

If you want to move money in an ISA to a provider with a better rate, always use the new providers xfer process. That way you maintain the interest free status. If you simply take money out of an ISA and pay it into another, it counts towards your £20k annual allowance. 

So I couldn't transfer it out and then open a new ISA and pay it in during this tax year? I'm still only having £20k in an ISA though?

You have used your full allowance for the current tax year. Therefore you cannot make any additional deposits this tax year. You could, however, request an ISA transfer at another ISA provider.

To get a better understanding of ISAs, you might benefit from reading this : https://www.moneysavingexpert.com/savings/best-cash-isa/