Why can you only have £3k in an ISA ?

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  • bubblehead_2
    bubblehead_2 Posts: 16 Forumite
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    At the start of each tax year, for the past 3 years, I have deposited £3000 into my ISA, and then save during the rest of that FY in a normal account,

    It builds it up over the years.

    Or, am I completely wrong and you can only have £3000 in it full stop?
    Filiss
  • DiggingOut
    DiggingOut Posts: 770 Forumite
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    You are right, the limits are yearly allowances, you get an additional allowance each year.
    I have five stars! This doesn't mean that I know anything about any of the things I post. I could be a raving lunatic, or a brilliant genius, or just some guy on the internet. In fact, I could be all three at the same time.

    If anything I say makes sense, then do it. If not, don't. Don't blame me or my stars if you do something stupid because I suggested it. I'm responsible for my own stupidity only. You are responsible for yours.

    Why, I don't even have five stars anymore! Aren't you glad you aren't responsible for my stupidity?
  • bubblehead_2
    bubblehead_2 Posts: 16 Forumite
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    Thanks DO

    Thats now put my mind at rest
    Filiss
  • zx2011
    zx2011 Posts: 309 Forumite
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    You can also save tax free at the Post Office with National Savings and Investments.
  • System
    System Posts: 178,094 Community Admin
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    "you get an additional allowance each year."

    Why did no one tell me that before? ???
  • isasmurf
    isasmurf Posts: 1,999 Forumite
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    You can also save tax free at the Post Office with National Savings and Investments.

    Only in Savings certificates and even with tax deducted you can do better elsewhere.
  • MJSW
    MJSW Posts: 171 Forumite
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    Only in Savings certificates and even with tax deducted you can do better elsewhere.
    Where? For higher rate taxpayers the National Savings tax-free products are very competitive at the moment.

    The 2 year bond is equivilent to 5.83% gross, and the 5 year bond is equivilent to 6.08%.

    With the index linked bonds, at current rates of inflation the 3 year bond is equivilent to 6.75% and the 5 year bond is equivlent to 6.92% :o (although these rates aren't guaranteed as they depend on future rates of inflation). With careful timing of entry and exit from the index linked bonds it is possible to achieve an even better rate due to seasonal patterns in the RPI.
  • biffwilcox
    biffwilcox Posts: 10 Forumite
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    Not very exciting, but once you have hit your ISA limit, why not pay off your mortgage with any other available funds ? I don't believe you can be taxed for NOT incurring a cost (i.e. the interest saved).

    It doesn't sound thrilling but it probably (depending on rates/redemption penalties etc) works out considerably better than the net return on a taxed savings account, especially for a higher rate tax payer.

    Please correct me if I am wrong.
  • lisyloo
    lisyloo Posts: 29,617 Forumite
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    You are right with a few exceptions.

    1) If you have a good mortgage rate then savings can work out better for basic rate tax payers.

    2) Make sure you don't have an annual interest mortgage. If you do then interest is not recalculated until the end of the year. Daily interest mortgages are better as the interest is re-calculated the next day.
  • biffwilcox
    biffwilcox Posts: 10 Forumite
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    It's not going to make you feel like Warren Buffett though is it ? ;)
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