How does ISA account work?

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1

Hey guys,

How does the £20k limit work? (2 scenarios)

  1. If I deposited £1000, my leftover limit would be £19K for the rest of the financial year. What happens if I withdraw £500? Would my limit be £19,500 now?

  2. What happens if I get paid dividends? If I deposited £1000 and got paid £5 in dividend, would my ISA limit still be £19k or £18,995?

Cheers :slight_smile:

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2

I’ll try answer this:

  1. Unless the ISA is a flexible ISA your remaining subscriptions would be £19k. A flexible ISA allows you to withdraw and add the money again without it counting towards your limit. The T212 ISA isn’t flexible.

  2. Dividends do not count towards your ISA subscription. Think of your ISA subscription as being the money you can put into the account. Whatever happens once the money is in that account doesn’t count towards the subscription. So if you stick £5k in and buy shares then sell for a £3k profit, you’d still have £15k of fresh money left to invest. Same with dividends. They are derived from the original investment so don’t count towards your limit.

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3

krr13 covered it all. only deposits are tracked, anything else will not impact the remaining quota.

Always remember that the aim of an ISA normally is to fill the quota each year and not withdraw any of the profits so as to allow for better growth the following year. the exception being those who use trading-pattern investing to make money in the short term to withdraw and use elsewhere.

no matter how many times you sell your shares, as long as you don’t withdraw those funds, you are able to reinvest those into new shares without any deduction to your yearly quota limit.

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