question about ISAs Watch

CasualSoul
Badges: 16
Rep:
?
#1
Report Thread starter 4 years ago
#1
I'm new to all this but I want to open a ISA

What does it mean when they say "if you don't use it you will loose it"

I think it refers to the allowance but what exactly do you loose:hmmmm2:


Also what does it mean by ISA cash?
It says here that each tax year you get a fresh ISA allowance. In 2013-14 tax year you have an ISA allowance of £11,520, of which no more than £5,760 can be held in a cash ISA.

It then says that you could invest 5,760 as ISA cash and then you don't have to put any of your ISA allowance on stocks/shares so does that mean that you will get tax-free interest on the 5,760 and then with the remaining 5,760 there is no interest on that?

Also the allowances change so if the ISA allowance is currently 11,520 and that is how much you have in the account but then the allowance decreases will you have to withdraw money out since you will be over the new allowance?
0
quote
reply
Illusionary
Badges: 19
Rep:
?
#2
Report 4 years ago
#2
(Original post by CasualSoul)
I'm new to all this but I want to open a ISA

What does it mean when they say "if you don't use it you will loose it"

I think it refers to the allowance but what exactly do you loose:hmmmm2:
You can invest only a limited amount into an ISA each tax year (ending on 5 April each year), currently £5,760 for a cash ISA. If it comes to the end of the tax year and you've invested less than that, you lose the ability to invest fund within that limit, though of course the new tax year's limit then applies.
Also what does it mean by ISA cash?
It says here that each tax year you get a fresh ISA allowance. In 2013-14 tax year you have an ISA allowance of £11,520, of which no more than £5,760 can be held in a cash ISA.

It then says that you could invest 5,760 as ISA cash and then you don't have to put any of your ISA allowance on stocks/shares so does that mean that you will get tax-free interest on the 5,760 and then with the remaining 5,760 there is no interest on that?

Also the allowances change so if the ISA allowance is currently 11,520 and that is how much you have in the account but then the allowance decreases will you have to withdraw money out since you will be over the new allowance?
There are two types of ISA, with the difference being what you're investing in. For a cash ISA< you simply deposit cash with the bank and it earns interest in the same way as any other savings account, but that interest isn't subject to income tax. For a stocks and shares ISA, your money is used to buy stocks/shares from a stock market and you'd then receive the benefit of any dividends paid out on the shares and any growth in their value - but in general, neither dividends nor capital growth are completely guaranteed so it's a more 'risky' investment.

The ISA allowance is a limit on how much you can invest in a given tax year, but when we reach a new tax year you can then add new funds on top of any currently invested. For example, if you have £5,000 invested at the start of a tax year and the investment limit for that year is £5,760, you can add funds to take your total investment up to £10,760.
1
quote
reply
Kvothe the Arcane
  • Community Assistant
Badges: 20
Rep:
?
#3
Report 4 years ago
#3
(Original post by Illusionary)
You can invest only a limited amount into an ISA each tax year (ending on 5 April each year), currently £5,760 for a cash ISA. If it comes to the end of the tax year and you've invested less than that, you lose the ability to invest fund within that limit, though of course the new tax year's limit then applies.
There are two types of ISA, with the difference being what you're investing in. For a cash ISA< you simply deposit cash with the bank and it earns interest in the same way as any other savings account, but that interest isn't subject to income tax. For a stocks and shares ISA, your money is used to buy stocks/shares from a stock market and you'd then receive the benefit of any dividends paid out on the shares and any growth in their value - but in general, neither dividends nor capital growth are completely guaranteed so it's a more 'risky' investment.

The ISA allowance is a limit on how much you can invest in a given tax year, but when we reach a new tax year you can then add new funds on top of any currently invested. For example, if you have £5,000 invested at the start of a tax year and the investment limit for that year is £5,760, you can add funds to take your total investment up to £10,760.
Oh!
I thought the limit was always the total limit. Didn't realise you could keep adding the new tax limit amount. Thanks!
0
quote
reply
Illusionary
Badges: 19
Rep:
?
#4
Report 4 years ago
#4
(Original post by keromedic)
Oh!
I thought the limit was always the total limit. Didn't realise you could keep adding the new tax limit amount. Thanks!
No problem at all :top2: Let me know if you have any other questions.
0
quote
reply
CasualSoul
Badges: 16
Rep:
?
#5
Report Thread starter 4 years ago
#5
(Original post by Illusionary)
You can invest only a limited amount into an ISA each tax year (ending on 5 April each year), currently £5,760 for a cash ISA. If it comes to the end of the tax year and you've invested less than that, you lose the ability to invest fund within that limit, though of course the new tax year's limit then applies.
There are two types of ISA, with the difference being what you're investing in. For a cash ISA< you simply deposit cash with the bank and it earns interest in the same way as any other savings account, but that interest isn't subject to income tax. For a stocks and shares ISA, your money is used to buy stocks/shares from a stock market and you'd then receive the benefit of any dividends paid out on the shares and any growth in their value - but in general, neither dividends nor capital growth are completely guaranteed so it's a more 'risky' investment.

The ISA allowance is a limit on how much you can invest in a given tax year, but when we reach a new tax year you can then add new funds on top of any currently invested. For example, if you have £5,000 invested at the start of a tax year and the investment limit for that year is £5,760, you can add funds to take your total investment up to £10,760.
Thanks Illusionary- yu da man! :thumbsup:
0
quote
reply
balotelli12
Badges: 9
Rep:
?
#6
Report 4 years ago
#6
(Original post by keromedic)
Oh!
I thought the limit was always the total limit. Didn't realise you could keep adding the new tax limit amount. Thanks!
Yes you can, which is why there are a few people who invested the max they could in ISAs and their predecessors, PEPs who have a million salted away now, earning tax free.
0
quote
reply
X

Reply to thread

Attached files
Write a reply...
Reply
new posts
Latest
My Feed

See more of what you like on
The Student Room

You can personalise what you see on TSR. Tell us a little about yourself to get started.

Personalise

Have you ever experienced bullying?

Yes (217)
78.34%
No (60)
21.66%

Watched Threads

View All