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Question about ISA's

Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
in Home, Law & Money
Right, I'm coming into some money in the next few months (personal injury claim) and I'd like to spend some and save some. I've heard about students putting their loans into an ISA and using the interest?

Basically, I have no idea about banking, so in layman's terms, what's an ISA and how does it work??

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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    I've got my loan in an ISA. As far as I understand it you can put around 3K in a year and at a high interest your money grows. So after a few years you'd have gained a few hundred pounds in interest.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    lacrymosa wrote: »
    Can you have more than 1 ISA?

    :no: you can't.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    lacrymosa wrote: »
    Even if they are in different accounts? How would they know?

    even then. its because ISA are subject to special interest/tax, so your only allowed one. likewise thats why there are rules about how much can be invested in any one financial year.
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    Former MemberFormer Member Posts: 1,876,323 The Mix Honorary Guru
    otter wrote: »
    even then. its because ISA are subject to special interest/tax, so your only allowed one. likewise thats why there are rules about how much can be invested in any one financial year.

    :yes: You can have money invested in more then one ISA but the rules are *very* complex so its stays in line with the legal tax free allowances. ISA providers have to send regular returns to HMRC who will check the data and ask for duplicates to be closed, and if it does you will be charged tax on any interest earnt.

    You can only put £3K a year in until 5th April, after that you can invest £3.6K a year tax free (worth thinking about if the compenstation is going to be over £3K, Illora) Use the best buy tables to get a good interest rate, buliding societies tend to have better rate then the high street banks. Over a couple of years the interest does build quite nicely, especially as its paid tax free.
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