Daft ISA question

[didds]

Keeping amounts simple and for sake of this example (clearly real world examples are far larger. This is merely for ease of understanding!)

- the max amount that can be put in an ISA is £100 per year.
- this figure never changes
- standard transfer laws are in place.
- there are multiple ISA providers named 1, 2, 3, 4, 5... etc

* year 1 I put £100 into ISA 1
* year 2 I put £100 into ISA 2
* year 3 I put £100 into ISA 3

In year 4 can I transfer the contents of ISAs 1, 2 and 3 into ISA 4, with a fresh £100 on top? (so £400 in one ISA)
In year 5 can I transfer the total contents of ISA 4 (£400) into ISA5 plus another fresh £100 (so ISA 5 has £500)

?

didds

[genou]

Keeping amounts simple and for sake of this example (clearly real world examples are far larger. This is merely for ease of understanding!)

- the max amount that can be put in an ISA is £100 per year.
- this figure never changes
- standard transfer laws are in place.
- there are multiple ISA providers named 1, 2, 3, 4, 5... etc

* year 1 I put £100 into ISA 1
* year 2 I put £100 into ISA 2
* year 3 I put £100 into ISA 3

In year 4 can I transfer the contents of ISAs 1, 2 and 3 into ISA 4, with a fresh £100 on top? (so £400 in one ISA)
In year 5 can I transfer the total contents of ISA 4 (£400) into ISA5 plus another fresh £100 (so ISA 5 has £500)

?

didds

Yes to all the questions as far as HMRC are concerned. Additionally you can do partial transfers. Not all ISA providers will allow the latter.

[didds]

tx!

secondary question... leaving ISAS asiode s[pecifically there is now no tax payavble on any interest no matter where its from, up to the first £1000 interest?


didds

[Alaric]

leaving ISAS aside specifically there is now no tax payable on any interest no matter where its from, up to the first £1000 interest?

It's £ 500 for Higher Rate taxpayers, but it's going to depend on the definition of "interest". Property Income Dividends (PIDs) from REITs ( Real Estate Investment Trusts) are not going to qualify. Another area where classification and domicile may be important will be offshore Bond funds. We'll find out possible exceptions when we work through how to classify payments on a Self Assessment form.

[PinkDalek]

secondary question... leaving ISAS asiode s[pecifically there is now no tax payavble on any interest no matter where its from, up to the first £1000 interest?

It could be more than £1,000 interest.

For 2017-18 (as there was in 2016-17 and 2015-16), there's also the Starting Rate for Savings income where up to £5,000 can be covered at 0%.

For a basic rate taxpayer, say your Non-Savings income (such as salaries, pensions, self employment profits, property income - including PIDs) is £15,000, this being not more than £5,000 greater than your personal allowance (£11,500), the net £3,500 would be taxable at 20%.

You'd then have £1,500 left of your Starting Rate for Savings income available to be taxed at 0%.

Only then does the £1,000 Personal Savings Allowance for a basic rate taxpayer (£500 for a higher rate taxpayer) come into play.

In my example, the taxpayer could therefore receive £2,500 interest with no Income Tax to pay.

Your figures may well differ, not knowing your personal situation, and I think your Non-Savings income may be far greater than the figure I used, from what you've said elsewhere. However, you could well be asking about someone else's situation.

I see your original DAK question has been moved to here Bank Accounts Savings & ISAs. The Taxes Practical Issues board is also available.