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.