ISA Confusion

MarkFlick

Hi all

Just a quick question on ISA's:

a) Does the Interest usually get paid at the end of the financial year or on a monthly basis? The reason I ask is that at the end of the financial year there's always loads of messages on these forums (yes I troll a lot!) about getting the ISA's signed up before the deadline.

Does this mean that I can open up a new ISA near the end of the financial year and: a) put the max amount of money in for the year then two or three days later get my interest paid as if it had been paid in over the year?

b) Mean I can then save money in to a 2007/2008 ISA in 2008/2009?

Alternatively, am I supposed to get the ISA at the start of the financial year, save into it each month until the end then take the tax free interest and move it to another ISA and start all over again?

Have had many discussions with my other half and we can't come to an agreement hence I'm here asking.

Yours very confused,
M&F

Lokolo

You can put a maximum of £3600 each tax year. People forget to open them at the beginning of the tax year so open them right at the end so they don't lose out on the £3600 benefit.

You will get paid based on the amount in the accounts daily. Thus if you have had £3600 in for 2 days you will not get a years worth, but 2 days worth.

And you can put money in an 07/08 ISA yes, but no more than £3600 new money (i.e. if you have £2500 before 6th April 08. you can put another £3600 in between 6th April 08-5th April 09. But you are then not allowed to put money in another ISA that year.

Paul_Herring

MarkFlick wrote: »

Hi all

Just a quick question on ISA's:

a) Does the Interest usually get paid at the end of the financial year or on a monthly basis?

It can be paid (subject to the discretion of the institution) monthly, yearly at end of tax year, yearly on anniversary of opening, yearly on some other date, or (yet to be seen) on some other schedule.

The reason I ask is that at the end of the financial year there's always loads of messages on these forums (yes I troll a lot!) about getting the ISA's signed up before the deadline.

Does this mean that I can open up a new ISA near the end of the financial year and: a) put the max amount of money in for the year then two or three days later get my interest paid as if it had been paid in over the year?

No, because interest is calculated on a daily basis. You'd only get 2-3/365 days worth of interest. You should put the money in as soon as you have it if you wish to put it in an ISA.

b) Mean I can then save money in to a 2007/2008 ISA in 2008/2009?

Any money saved in a previous tax year (and any interest earned) have no effect on future years' contributions limits.

Alternatively, am I supposed to get the ISA at the start of the financial year, save into it each month until the end then take the tax free interest and move it to another ISA and start all over again?

If you don't actually need the interest, you should leave it with the ISA to earn interest, not only on your previous contributions, but the interest that's been added. The added interest will not affect your limit for adding funds the next tax year.

Whether you move it, or simply add more funds to it the next tax year is largely dependant on the interest rates around at the time.

ukdutypaid

You're 'lurkin' not 'trolling'... Troll.. Think big 'orrible creature that lives under bridges... Leaps out at unsuspecting room users, throws a load of stones (statements/language, likely to get everybody's backs up) and then runs off, only to hide again, when the damage has been done....

So, don't castigate yourself unnecessarily... lol....