cash ISA interest?

jules73_2

Hi

I just wanted to confirm that I'm doing the correct thing with my interest.

My £3000 allowance for this year is full and at the beginning of each month, I take out the interest and put it in my savings account to go towards the next ISA.

Is this OK, or am I supposed to leave it in the ISA for the whole year?

The reason that I'm questioning this is because I thought any excess money was meant to be automatically transferred to my other account..which hasn't happened. I did leave the interest in the ISA last month to see if it took the bank more time to transfer it, but they didn't.

Thanks

jem16

You should never take out the interest from an ISA. Leave it in the ISA to benefit from compounded interest.

jules73_2

jem16 wrote: »

You should never take out the interest from an ISA. Leave it in the ISA to benefit from compounded interest.

But I didn't think you earn anything if you are already at the £3000 limit

Lavendyr

You earn interest on the interest as well as on the £3k per annum (£3.6k from this April) that you deposit. Interest does not count towards the amount you are allowed to deposit each year, it is on top of that. So leave the interest where it is from now on!! Once you take it out, it loses its tax-free status. So the interest you've taken out you can't now put back unless it's as part of your £3k/£3.6k allowance.

jules73_2

Thanks very much for clearing that one up for me Lavendyr.

From now on, I'll leave it well alone:o
I think I'll manage to still sleep at night though.

Paul_Herring

Interest is not included in the £3000/£3600 contribution limit; i.e. interest is not considered as 'contributions.'

Unless you require the money for anything else, the interest should be left in the ISA.