Newbie ISA questions...

djkav

Hi, I'm looking to set up an ISA and have some newbie questions.

1. As I understand, I can only have 1 ISA per year. Does this mean that I can have £3000 in an ISA for 2007-08, then start a new ISA with a new £3600 allowance for 2008-09. Thus leaving me 2 ISA's from 2 different tax years?
2. Is it worth starting an ISA now or wait till the new tax year?

Comments very welcome

Kav

bristolleedsfan

djkav wrote: »

Hi, I'm looking to set up an ISA and have some newbie questions.

1. As I understand, I can only have 1 ISA per year. Does this mean that I can have £3000 in an ISA for 2007-08, then start a new ISA with a new £3600 allowance for 2008-09. Thus leaving me 2 ISA's from 2 different tax years?
2. Is it worth starting an ISA now or wait till the new tax year?

Comments very welcome

Kav

1. Yes.

2. Worth starting an ISA now rather than wait until the new tax year.

fisher-man_2

Does this mean that you can add another ISA every tax year?

If I opened an ISA in year 1 and put say 3k in it and did the same for say the next 3 years (4 years in total) I would have.

1 with 3k
1 with 6k
1 with 9k
1with 12k and so on.

Is that correct, there is no limit to the amount you can have, and each can be added to each tax year?

debbie42

fisher-man wrote: »

Is that correct, there is no limit to the amount you can have, and each can be added to each tax year?

It's limited by the allowance each year, if you fund it to the max. In practice you may consolidate into one ISA by transferring existing ones to new ones (as I've done, to take advantage of better rates).

Incidentally, the allowance is going up a bit next year.

Aegis

fisher-man wrote: »

Does this mean that you can add another ISA every tax year?

If I opened an ISA in year 1 and put say 3k in it and did the same for say the next 3 years (4 years in total) I would have.

1 with 3k
1 with 6k
1 with 9k
1with 12k and so on.

Is that correct, there is no limit to the amount you can have, and each can be added to each tax year?

Not quite... You can contribute a maximum of £3k this year (rising to £3600 pa from April) in total to your cash ISAs. This must be to a single active ISA each year, though your active ISA can be transferred to a new provider and contributions can continue there.

As such, you'll have 1 cash ISA in year 4 with 12k worth of deposits (ignoring the extra £600 a year for the moment) plus interest.

10_66

1) 2007 – 2008 £3,000 (maximum allowed)
2) 2008 – 2009 £3,600 (new limit, next financial year)
3) 2009 – 2010 £3,600 (assuming limits etc haven’t changed)
4) 2010 – 2011 £3,600

Alternatively, if you wanted to keep to the same ISA manager for the 4 years’, you would just add the appropriate amount (ie £3,600 this April) to your existing ISA manager each year, so you would have £13,800, plus accrued interest at the end of 4 years.

fisher-man_2

I must have misread it. Post No 2 from bristolleedsfan suggested you can hold more that one ISA but can only put in the limit in any one tax year. (in to each of them)

Maybe I never explained myself very well.

Can I take out an ISA in this tax year and take out another in each successive year?
So I take out one in 07/8 and add 3k to it, in 08/9 I take out another and add 3.6k to it and add 3.6k to the original one. Thus I have two ISA's one with 6.6k and one with 3.6k?

Is that correct or have I got it completely wrong?

[Deleted User]

Hi,

you also have the option of putting £7k into a maxi ISA, each tax year, have a look here.

I would set one up this tax year, else you will lose this years allowance, you don't need to dive in early next tax year, you'll then have all year to think about it.

Some folks like to be in at start of tax year, and some last week of tax year, then a mad rush, either way, for the sake of a week or two, little difference.

Mikeyorks

fisher-man wrote: »

have I got it completely wrong?

Yes ... you've (still) got it completely wrong:p

The fundamental you're missing is that you can only contribute to any one ISA in a tax year. So you can either consolidate your ISAs (by transfer .. if you decide to have them with different providers) or open fresh ones each year .... but you can only contribute to one of them if you decide to have multiples.

So .. taking your first example (post #3) - you could only finish with 4 ISAs each with £3k in.

And ... your last example (post #7). If you want to take out a fresh ISA each year (why ... 'cos you can simply add your new allowance to the previous one?) ...... you would finish with £3k in the 07-08 one and £3.6k in the 08-09 one. Or you can just add the £3.6k allowance for 08-09 ... into the ISA you first started with, and have the one ISA with £6.6k in it.

fisher-man_2

Of course, I see now. I can have as many as I want but the total I can invest in all of them in any one tax year is the limit for that year.

Where's the 'feeling stupid' smiley?:o

Mikeyorks

fisher-man wrote: »

Of course, I see now. I can have as many as I want but the total I can invest in all of them in any one tax year is the limit for that year.

Nearly ... but not quite, I suspect? The fact you've made 'total' bold ... suggests you believe you can spread your annual allowance around the ISAs you hold. Which you can't.

There are some eccentricities around transferred ISAs. But the basic premise is that .... ' you can only contribute to one ISA in a tax year'.

So (next year) you can add £3.6k to an existing ISA. Or open a new one - put say £1k in and then add the remaining £2.6k later. But you couldn't put the (balance of) £2.6k into your previous year ISA! You can't split the allowance like that.

There's some FAQs in the Sticky at the top of this (ISA) forum .. worth a read?