Full ISA Guide Discussion Area

jamesallen

Can someone please clarify ISAs for me? To stick with Martin's cake analogy, what I'm not sure about is whether I get a new piece of cling-film every year (and keep the old one too) or whether I use the same piece, which just expands a bit with inflation.

So say I invest £5000 in a cash ISA. Next year, can that £5000 and its interest remain tax free whilst I also open a new ISA, giving me a total of £10,000 untaxed savings (or a little more accounting for inflation and interest)? Then the next year I could have £16,000 untaxable savings, and so on? Is this how it works?

le_loup

jamesallen wrote: »

So say I invest £5000 in a cash ISA. Next year, can that £5000 and its interest remain tax free whilst I also open a new ISA, giving me a total of £10,000 untaxed savings (or a little more accounting for inflation and interest)? Then the next year I could have £16,000 untaxable savings, and so on? Is this how it works?

That is entirely correct.

davidm1

'transfer in' does it have to be your own account(name)?

Lokolo

davidm1 wrote: »

'transfer in' does it have to be your own account(name)?

Yes, ISAs are individual...

jamesallen

le_loup wrote: »

That is entirely correct.

Thank-you.

I completely missed the crucial point of ISAs. I thought it was just a tax-free way of saving £5000 a year. :embarasse:o

indi_d

If I have used my ISA allowance for this financial year (as well as transferred previous years) with one provider (lets say at 2.5%) but then I see another offer at another provider in the same financial year (say at 3.07%) am I able to transfer my ISA pot again to the new provider?

ianmackers

I'm a little confused... I know you can only open 1 ISA a year, but if you have multiple accounts, can you split your yearly contributions too?

2010 - Stocks and Shares ISA with provider A (£0)
2011 - Stocks and Shares ISA with provider B (£8800)

Can I now contribute the 2011 outstanding allowance into A (£1880)

Thanks

ianmackers

indi_d wrote: »

If I have used my ISA allowance for this financial year (as well as transferred previous years) with one provider (lets say at 2.5%) but then I see another offer at another provider in the same financial year (say at 3.07%) am I able to transfer my ISA pot again to the new provider?

Yes, as long as you close your ISA for the current year, you should be able to open a new account with the better rate... Although this may now be a bit outdated! :exclamati

Read the 'Second Loophole': moneywise[dot]co[dot]uk/news/2009-09-25/could-you-cash-isa-loophole

bubbles0169

i started a cash isa last year to save for my wedding in september, they venue want 50% of the outstanding bill to be paid by 1/03/12, will i lose out on interest if i withdraw it out now or will it still be counted come april?

blueberrypie

bubbles0169 wrote: »

i started a cash isa last year to save for my wedding in september, they venue want 50% of the outstanding bill to be paid by 1/03/12, will i lose out on interest if i withdraw it out now or will it still be counted come april?

Usually interest is calculated daily, so you'd receive interest on the funds you have in the ISA for as long as they were there - so, for example, if you had £1000 in the ISA for 200 days, you'd get 200/365ths of the interest you'd expect if the money had been in the ISA for a full year.

If you close the ISA now (by withdrawing all the funds), the interest will be paid on closure. If you only withdraw some of the funds, interest will be paid at whatever date is specified in the t&c.

If it's a fixed-rate ISA, there may be a penalty for early withdrawal - check the ISA's t&c.