ISA allowance

[Sterlo]

Am i right in thinking then, if you had accrued say 100k into an ISA over several years, all the interest earned each year is tax free?
Plus the possible £1000 interest allowance on non ISA savings, as mentioned above?

PS - I'm at the thin end of the wedge, IFA fees would cancel out any potential tax savings.

Correct, any ISA interest is always tax free, irrelevant of the amount. As you state as well, the first £1000 of any non ISA interest gained is also tax free (as long as you are a basic rate taxpayer @DCLane)

 

[Sterlo]

Something no-one has mentioned that I can see, the £20k per year is across all ISA's, not just one. So if you have a cash ISA and an S&S ISA, the £20k can be split between them but not exceeded in total. Although I don't have one so not 100% certain, I believe also, there is a limit of what you can put in a Lifetime ISA (£4k a year I think), but this is also included in the £20k annual limit. The rules did change at the last budget which now allows you to pay into more than one cash ISA in a tax year, but the overall £20k limit still applies. Also, if you transfer an existing ISA to another provider, this does not count as a payment into the account so you still have the £20k to deposit. I'll will now go and lie down in the corner of a dark room.

 

[DCLane]

Correct, any ISA interest is always tax free, irrelevant of the amount. As you state as well, the first £1000 of any non ISA interest gained is also tax free (as long as you are a basic rate taxpayer @DCLane)

I'm not on the basic rate, although looking at the bikes I ride you might think I am

But yes, suitable advice to split it across different elements @Sterlo . I'm using a Stocks & Shares ISA with Vanguard, which a set monthly amount goes into, plus an additional cash ISA elsewhere which I've been adding to as I can.

Just note that if the worst happens to you it's better not to be over the probate threshold for each financial provider you're with. Also, annoyingly as I've found out recently as my Mum's co-executor, these differ widely. And because we're over the probate threshold for an ISA with one we're having to go through probate for all - which means my Dad can't do anything with the house or her monies until it's all sorted.

 

[vickster]

Any premium bond, lottery, gambling wins are tax free too (plus loan sharking and extortion but those aren't typically legal )

 

[DCLane]

And competition wins. Including this one (no, not the old red Peugeot Tepee that son no. 2 currently has)

Not that I've had any wins this year

 

[Rusty Nails]

Am i right in thinking then, if you had accrued say 100k into an ISA over several years, all the interest earned each year is tax free?
Plus the possible £1000 interest allowance on non ISA savings, as mentioned above?

PS - I'm at the thin end of the wedge, IFA fees would cancel out any potential tax savings.

If you are just taking about cash ISAs then there is no need for an IFA. You can get them without an IFA at banks and building societies.

 

[Alex321]

Am i right in thinking then, if you had accrued say 100k into an ISA over several years, all the interest earned each year is tax free?
Plus the possible £1000 interest allowance on non ISA savings, as mentioned above?

PS - I'm at the thin end of the wedge, IFA fees would cancel out any potential tax savings.

Yes, you are correct.

If you only have enough to invest to just about use up the £20K per person ISA allowance, you probably don't really need an IFA.

Remember also that ISAs are individual (That is what the I stands for). If you are married, you each get a £20K per year allowance, but they can't be pooled, it is one in each of your names.

 

[figbat]

Remember also that ISAs are individual (That is what the I stands for). If you are married, you each get a £20K per year allowance, but they can't be pooled, it is one in each of your names.

Yes, but it must be clear that these funds belong to the named account holder. If you set up a second ISA in a partner's name, the money is theirs. You can't place any claim on it, should anything happen that sees you arguing over money.

 

[FrankCrank]

I already bank with Nationwide, and have a couple of bonds with them. Will most likely do an ISA with them, just to keep things easy.

 

[Brandane]

On ISA's, which are new to me....
I took out a cash ISA last year. It was a decent interest rate but only for a year. So in April (after 5th) I had to transfer the cash into another ISA (same provider) to avoid dropping to a ridiculously low interest rate.
My question is, does the transferred cash count towards this year's ISA allowance? Or can I start paying into another one (or even the same one)?

 

[Buck]

On ISA's, which are new to me....
I took out a cash ISA last year. It was a decent interest rate but only for a year. So in April (after 5th) I had to transfer the cash into another ISA (same provider) to avoid dropping to a ridiculously low interest rate.
My question is, does the transferred cash count towards this year's ISA allowance? Or can I start paying into another one (or even the same one)?

In this case you need to transfer the ISA to another one paying a better rate. This will keep the ISA ‘wrapper’ on the money in that account maintaining its tax free status.

If you withdraw the money and then invest into a new ISA that would be seen as a new ISA and so would be part of the current tax years allowance.

 

[Alex321]

On ISA's, which are new to me....
I took out a cash ISA last year. It was a decent interest rate but only for a year. So in April (after 5th) I had to transfer the cash into another ISA (same provider) to avoid dropping to a ridiculously low interest rate.
My question is, does the transferred cash count towards this year's ISA allowance? Or can I start paying into another one (or even the same one)?

Transferring from one ISA to another no longer counts against your allowance for that year (when they were first introduced it did, but they changed that a few years ago).

So you can transfer it and then continue paying in either to the old one, or the new one, or another one entirely.

 

[Alex321]

In this case you need to transfer the ISA to another one paying a better rate. This will keep the ISA ‘wrapper’ on the money in that account maintaining its tax free status.

If you withdraw the money and then invest into a new ISA that would be seen as a new ISA and so would be part of the current tax years allowance.

Yes, although nowadays you can withdraw some and then pay it back into the same ISA without it counting against your allowance, if your ISA id "flexible".

But as you say, if it is going into a different one, it has to be specifically done as a transfer.

 

[SpokeyDokey]

How do you guys know these things?

I think it is indicative of how much, or how little, attention that people pay to their savings/investments.

Ime, many people belong in the 'don't category and tend to see no further than their current account & premium bonds, and a notional nod to their pension pot (if any).

 

[chris-suffolk]

@Sterlo - Almost. Up to £1000 for a standard rate taxpayer, but only £500 for a 40% higher rate one and £0 if you're on 45% additional.

Nearly correct. There is also a £5k allowance on top of your personal tax allowances, that gets reduced by £1 for every £1 you earn over the allowance. So most people will lose it quite quickly, but if you don't work, but have substantial savings it can make a big difference. We have over £100k in my wife's name and pay no tax on the interest. It means somebody at about the personal tax allowance gets £6000 of tax free savings interest.