ISA rules

Apr 16, 2007 2 Replies
K
3 questions about an ISA that I hold as I am a bit confused over the rules. The balance currently stands at £6000 (£3k invested last tax year, £3k for current tax year).


1) Is interest accrued on what I pay in for THIS tax year only or is it accrued on the full amount invested?



2) As I have reached the limited for this tax year, will the interest have to be paid into an alternative account or can it be paid into the ISA?
3) Finally, do I accrue interest only on the amount invested, or if interest is paid in monthly, will I accrue interest on the investment
  • interest i.e. will the interest be the same each month or will be increase incremently?

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R

The full amount, of course.

Generally interest goins into the ISA itself, but some providers let you choose to have the interest go into a different account, and some might insist.

If interest is paid monthly, and not merely accrued, then the interest itself will earn interest too, i.e. the interest (like the balance) should grow exponentially.

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J

In message , KLR writes

The full amount.

No. It isnt 'paid into the ISA' it accrues within the ISA and is credited to the account and therefore doesnt effect your contribution level.

It should increase monthly (if it is an ISA in which pays the interest monthly. This is called 'compounding' and you get interest on the interest..

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