What are the tax implications of liquidizing an ISA holding? (UK)

Question

In other words, what, if anything, stops honest taxpayers from filling up all of their stock&shares, and money ISAs, removing it from being a tax liability, then liquidizing it immediately?

Answer 1

Nothing stops you doing that, but there's no gain to be had by doing it. "Removing it from being a tax liability" isn't a single event that happens when you put money in an ISA. The money that actually goes into the ISA is post-tax income, not pre-tax income.

The benefit you get is that as long as you leave your money in the ISA, you don't pay tax on interest or capital gains within the ISA. If you liquidate an ISA immediately after creation, you won't get any such interest and therefore no tax benefit.