It is important to understand ISA stocks and shares. Ever since their inception, everyone over the age of 16 has an ‘ISA allowance’ which encapsulates the optimum that I can save within one full financial year. The limit currently in place is £10,200 of which I have the options of placing the entire amount in liquid cash, the equivalent of the same amount in shares or I can place both cash and shares in one basket. On withdrawal, there is no need for me to place my investments in ISA for a long period of time in order to reap the tax-free benefits. The upset of this is that once money is withdrawn I cannot in any way whatsoever return it.
Luckily ISA gives us the options of placing our investments in different modes. We have the choice of placing our entire £10,200 in either cash or shares. Alternatively, we can opt to place both cash and shares, which are more advantageous, seeing that if it were shares alone we would not have any tax-free cash savings; and if it were money alone we would not be obliged to do so. In case I bought shares worth my limit thereafter I decided to sell the same, ISA allows me to do so. However, I cannot buy any more shares in that financial year. Similarly if I invested less than my limit at the start of the tax year I would have the difference either in cash or in shares or a mix of the two.
Finally, any unused allowance is not carried forward. If I have not used it by the end of the tax year I will lose it. In short all my savings should be directed towards ISA for them to earn interest.