I would like to open an ISA account to invest in funds and I see that the maximum allowance is increasing to 15,000 GBP in few months.
My understanding is that all incomes generated in the ISA are tax free. But does this also apply to potential gains that are realized within the tax year?
In other words, it is not clear if (in order to benefit from tax benefits) I need to hold my investments until the end of the tax year.
Just to make an example. Suppose that tomorrow I invest 10,000£ in a fund and this increase in value to 12,000 in 5 months time (in october, so before the end of the tax year). In october I decide to realize the profit, thus I sell the fund. My gain is 2,000£. Is it tax free?
If I then reinvest (still 10,000£) in another fund, and I realize another profit by selling it just 1 month later (november) is this other gain still tax free?
Just to summarize, it is not clear if realizing profits by switching between funds actually leads to tax free income or there is some condition to meet in order to qualify for tax free treatment (eg. gains from "trading" the fund by switching from equity to monetary funds are not allowed and thus they are taxed). Thank you.