Cahs ISA's query

[Avatar]

Cash ISA's
So you are allowed �3000 odd per tax year. (going up to �3600 this year)
Say in year 1 I save �1000
year 2 another �1000
year 3 another �1000

presumably each �1000 has to be in the ISA for that year?
once a year is up, no further money may be added into that years ISA?

In year 4 I will be getting 3 lots of tax free interest on �1000?
(If I had saved �3000 each year I would be getting tax free interest on �9000?)

If in year 4 I decide I need to take out �1000, which ISA should I take it from?
Once I've taken it out, say from year 1 I presume I cant then add it back in to year 1 later and have effectively lost that one?

Cheers!

[CheekyChops]

You can put the whole 3K in at once if you want:

Year 1 save �3000
Year 2 save �3000
Year 3 save �3000.

If you only save �1000 in year one, then you can't go back in year 2 or 3 and add the other �2000.

In year 4 you will be getting one lot of tax free interest on �3000 not 3 lots of tax free interest on �1000!

I'm not sure you grasp the concept - what do you mean "In year 4 I decide to take out �1000, which ISA should I take it from?" You will only have one ISA. You just can't pay more than �3K into it in one year. If in year 4 you want to withdraw �1000, you don't take it from year 1 or year 3, you just withdraw it friom your account - when you paid it in doesn't come into it. And no, you can't put it back again later (unless you haven't paid your �3K limit in for the current tax year).

[Avatar]

Thanks cheeky I didnt realise that.
So over the years then your amount of tax free interest coul dbuild up to quite a nice sum.
After 10 years of �3000 saving, you would be getting 30,000 interest free?

Also what happens if I decide I dont like the ISA im on and want to swap to a different company after 2 or 3 years?

[buildersmate]

Correct about the amount of tax-free interest after 10 years - you could by then have �30k capital in the Cash ISA. And of course the interest on the onterest accrued.
You can move your ISA around between companies if you wish - indeed you can have an ISA with more than one provider - you just can't put more than �3k into your Cash ISA accounts within the same tax year.

[burbie]

If you do decide to move your ISA to a different bank, make sure you go to that bank and ask them to TRANSFER the ISA to a new account with them.
If you withdraw all the money yourself, for instance by having it all paid to you by cheque,or into a current account, it will mean you will have closed your iSA.
You would not be allowed to go to the other bank with your cheque and pay in several years ISA. You would only be allowed to put in one years allowance.
In effect starting at year one.
If it is all transfered from ISA in one bank to ISA in the other bank, you can tranfer all your balance, and you will keep your tax free ISA status.

[hammersgirl]

And just one further point - the interest that has accrued on the Isa is included in it, so that you don't just transfer the money that you put in, you transfer the interest too.

Some providers won't allow transfers in of previous Isas, for example the Post Office had a good rate, but only to new money.