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The Individual Savings Account scheme allows UK residents to save up to £20,000 tax-free each year in an ISA. The interest, income or capital gains from this account are tax-free.

Suppose I have put £20k in my ISA, and due to gains it is now worth £21k. What happens to this money after the 2017-2018 tax year ends and the 2018-2019 starts?

  • Do I have to withdraw the £21k and start a new ISA from scratch?
  • Or can I accumulate a further £20k into this account the following year, reaching a total of £41k in the account, all of it netting tax-free gains?
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ISAs last for as long as you live - you can accumulate a further £20K each following year (or whatever the limit changes to) and the whole balance including gains is tax free.

You can also leave the £21k in the first ISA, and open a new ISA the next year, if you prefer. You can also transfer a balance from one ISA to another (make sure you go through the explicit process for doing that, don't just withdraw it and re-deposit it, otherwise the protection is lost.)

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  • And if you keep going for long enough and invest astutely enough, you could join the ranks of the ISA millionaires
    – AakashM
    Commented Nov 29, 2017 at 8:59

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