Full ISA Guide Discussion Area

DiceManUK

All,

Firstly, thanks for this, it's been reassuring to realise that everyone has the same questions as me, and that I'm not a complete moron for having them. It's helped me get my head around this somewhat, which I think I do now... i think.

So, to summarize,
- everyone geta a £3600 allowance a year (april to march) in Cash ISA form.
- If you withdraw money from the ISA, the allowance reduces by that withdrawn amount.
- Interest is paid, tax free, on that figure, and thereafter every year on the accumulated figure in the ISA (this years + next years has interest calculated onto it)

All good so far?

Ok, so daft question time.

- if the interest is paid back into the ISA, does it become part of the allowance?
- I'm assuming it's best to get an ISA for both my Mrs, as well as myself?
- Alot of the ISA's have a bonus rate for 12 months. If I take one now (I'm looking at the Barclays Tax Haven ISA), is there any impact/issue with transferring halfway through a tax year to get a better rate? Is it better to do it in April?

Ok, I think that's it. Again, I really appreciate the advice thus far, but these bits I'm still unclear on.

D.

Lokolo

1. No interest is not counted as allowance.
2. Yes that is correct.
3. Nothing wrong with transferring in the middle of the tax year. However, it is not best to transfer around April as there is a lot of demand at this time, there can be huge delays in opening ISAs and transferring them. If you open a Barclays ISA now, you can transfer the ISA next August just before the rate drops.

DiceManUK

Thanks, That helps a few headaches But, stoopid question time again....

So, End year one, the ISA total is Year one investment plus year one interest. Is year twos interest calculated on year ones investment + year ones interest + year two's investment?

Lokolo

Yes if you choose to do it like that. You can put the year 2's contribution in a different ISA and it still works out the same. But basically in 10 years you could have £36k + interest which is counted as your ISA, all tax free.

Langkawilady

I have £7.75K in a Virgin PEPs. I first invested £6K in 1998 and a couple of years later the interest rate plunged and it went down to £3.5K and has taken this long to built up to £8.25K. It has gone down £500 in value over the last twelve months. Should I think to transferring the money to another type of ISA as I do not want to lose this money again? Can any one help please?

ceedy

Just wondering ...

If you have a ISA with same bank/institution as your saving account, and the total amount of both goes over 35k , is it covered or included in the FSA 35k protection or is the ISA protected separately.

thanks

C.

RayWolfe

No. It's all money with the institution.

ceedy

thanks for that.. will move a little more money out now!!

C

LianneB1

I am totally new to ISAs and am a bit confused by some of the statements regarding withdrawal. If I want to withdraw from an ISA do I then have to pay tax on the interest earned? If so doesn't this defeat the whole object?

Basically I am looking for a safe way to look after my money without the tax man taking even more of my hard earned cash - even the interest I earn, this country punishes people for trying to save and with the crdit crunch every penny counts!!

Thanks in advance for any help or advice.

Baldur

LianneB1 wrote: »

I am totally new to ISAs and am a bit confused by some of the statements regarding withdrawal. If I want to withdraw from an ISA do I then have to pay tax on the interest earned? If so doesn't this defeat the whole object

No, the interest earned while in the ISA is tax-free BUT once withdrawn and, for example, paid into an ordinary deposit account it then becomes subject to taxation in the same way as any other cash which you deposit.