[Finance] ISA advice please

[Papak]

I understand the annual ISA rules and am ready to open one this month but my question is whether in subsequent years the tax free interest benefits remain?

I'm guessing not and tax is liable on an ISA from year 2 (assuming a 2nd is opened in the next tax year) but I can't find anything at all online.

I can't be the only person not knowing this can I?

 

[Westdene Seagull]

I'm no tax expert but I thought the tax benefits remained of the lifetime of the ISA.

 

[Paulie Gualtieri]

As long as the funds stay in an ISA then they do not attract income tax regardless of how long they have been held.

You get an annual allowance each year of £20k so year two you would have up to £40k tax free (depending on the funds still held up to 20k on year 1)

If you are moving funds from an existing isa to a new isa make sure it’s treated as an isa transfer otherwise it will count as a new subscription.

 

[Uncle C]

At present an ISA is for life, so same tax concessions year on year. If there is a fixed period like a bond, you have the option to renew with the same people or switch to a new provider for free. This can continue for ever, until you take the money out and then you loose that years allowance and cant go back in. Its called keeping the ISA under its own umbrella.

 

[Papak]

I'm no tax expert but I thought the tax benefits remained of the lifetime of the ISA.

As long as the funds stay in an ISA then they do not attract income tax regardless of how long they have been held.

You get an annual allowance each year of £20k so year two you would have up to £40k tax free (depending on the funds still held up to 20k on year 1)

If you are moving funds from an existing isa to a new isa make sure it’s treated as an isa transfer otherwise it will count as a new subscription.

At present an ISA is for life, so same tax concessions year on year. If there is a fixed period like a bond, you have the option to renew with the same people or switch to a new provider for free. This can continue for ever, until you take the money out and then you loose that years allowance and cant go back in. Its called keeping the ISA under its own umbrella.

Thanks All for the feedback.

A follow-up question:

If you are in year 2, can you move year 1's ISA to a different provider (to benefit from a better rate for example) or does that action count as year 2's deposit?

EDIT - reading @Paulie Gualtieri 's response again slowly has I think answered this.

I'm wondering if providers keep their rates competitive to retain the investment and encourage further investment in future years.

 

[worthingseagull]

as mentioned previously just make sure you apply for it as an ISA TRANSFER, then you will be able to apply for a new deposit that year also

 

[Paulie Gualtieri]

Thanks All for the feedback.

A follow-up question:

If you are in year 2, can you move year 1's ISA to a different provider (to benefit from a better rate for example) or does that action count as year 2's deposit?

EDIT - reading @Paulie Gualtieri 's response again slowly has I think answered this.

I'm wondering if providers keep their rates competitive to retain the investment and encourage further investment in future years.

You can transfer year 1 to a new provider (better rate) and this won’t count toward your year 2 allowance. (As long as it’s recorded as an isa transfer)

 

[Paulie Gualtieri]

Thanks All for the feedback.

A follow-up question:

If you are in year 2, can you move year 1's ISA to a different provider (to benefit from a better rate for example) or does that action count as year 2's deposit?

EDIT - reading @Paulie Gualtieri 's response again slowly has I think answered this.

I'm wondering if providers keep their rates competitive to retain the investment and encourage further investment in future years.

My Marcus cash ISA also has a “bonus” rate which they up frequently to retain customers