How does the ISA exactly work?

Hi, so the max allowed to invest for an ISA per year is 20k, I have known this for a while but I always had this question in mind.

This means that you can put and buy shares through the trading212 ISA a total amount of 20k in lets say this year 2020, then the next year put another 20k and do the same right?

So lets say the first 20k gives you 10%, then the next 20k of the following year gives you another 10%, you would have 20k * 1.1 + 20k * 1.1 = 44k in total -> +4k in gains right?
This without paying any taxes?


in a nutshell yes, although to be pedantic 20k x 1.1 + (20k + 20k) x 1.1 = 46k :slight_smile:

also it is worth clarifying the 20k limit only applies to deposits. If your 20k investment goes to 100k in one year (would be nice) you can still buy/sell etc inside your ISA with the whole 100K without withdrawing.

Without withdrawing? if after 2 years you get to 46k aren’t you allowed to withdraw that? Or even in the case that goes up to 100k.

Yes you can withdraw whole 100k(or whatever amount) without paying any tax. What I meant was you can keep juggling money inside ISA without withdrawing.

You can always withdraw and all gains are tax free, no matter how large. But you can only deposit £20k of new money in each tax year. Because the growth is tax free your ISA and SIPP are the last places from which you would ever want to withdraw. Always prefer to fund your living expenses from other bank balances and salary income.

Cheers! Sounds awesome.

Do you have to declare any withdrawal on your tax returns?
Also heard that you can make 12 k per year tax free on your invest account? Is this correct for Uk citizens? Do you have to declare it ?

Almost correct to the first question and yes to the second.

UK folk have £12,300 a year allowance from capital gains tax (CGT). If this 12.3k profit is from stocks only, then yes it tax free. Though remember, you may have capital gains obtained elsewhere.

You also must declare your tax even if it is below the limit of your CGT allowance. Absolutely not financial advice, but if you’re investing small amounts and don’t go over the allowance, it’s not the end of the world if you don’t declare. But ignore what I just said and actually declare.

If you using an isa to withdraw money you don’t need to declare this do you?

I’m Irish :shamrock:I’ve no idea.


According to this, no you don’t.

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Think I have found the answer:

“You can take your money out of an Individual Savings Account (ISA) at any time, without losing any tax benefits. Check the terms of your ISA to see if there are any rules or charges for making withdrawals.“


Thank you @obrienciaran . I’m still not sure about the declaration to HMRC about whether I should state I hold stocks as I have only bought not sold any . Started little by little since March?

You don’t need to tell HMRC that you own stocks. You only to communicate with them about tax you owe.


I’m not sure how it works in the UK but here in Ireland I also don’t want to awaken the beast. I’ve been under the capital gains tax allowance so haven’t declared anything yet even when I should. That would be the start of yearly letters asking me like a child ‘are you over the allowance this year…what about this year…what about this year…this year?’. And more forms to fill out full of 0s!

i’ll pay when the time comes in 10 years or so once I sell!

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In Ireland “The first €1,270 of taxable gains in a tax year are exempt from CGT.” Therefore you might wish to realise this amount of capital gains as this is a use-it-or-lose-it allowance. See here.

Yes that is indeed what I do! It’s a measly allowance but I’m certainly making use of it as like with the UK, it can’t be carried forward.