How does cash ISA & share ISA mix together
"There are two different types of ISA; the ""Cash ISA"" for cash savings, and the ""Stocks and Shares ISA"" for stock market investing.  You can transfer funds between these two different types of ISA.  If your current cash ISA provider does not provide stocks and shares ISAs, then there may be a fee involved when transferring funds between two different providers. If I am reading your notation correctly, you have contributed the full allowance of GBP15,240 in both the current tax year and the previous tax year.   Each year you can contribute GBP15,240 (currently) to your ISAs and this can be done in any combination of cash ISA and stocks and shares ISA.  For example, you could put GBP5,240 into your cash ISA and GBP10,000 into your stocks and shares ISA. Regarding your questions : It is also important to understand that once you withdraw money from an ISA, it does not affect your previous contributions or allowances.  For example, if you have used your full contribution allowance for the current year and chose to withdraw some funds, then you have still used your full contribution allowance and so you cannot redeposit these funds."
The 'same day rule' in the UK is a rule for matching purposes only.  It says that sales on any day are matched firstly with purchases made on the same day for the purposes of ascertaining any gain/loss. Hence the phrase 'bed-and-breakfast' ('b&b') when you wish to crystalise a gain (that is within the exempt amount) and re-establish a purchase price at a higher level.  You do the sale on one day, just before the market closes, which gets matched with your original purchase, and then you buy the shares back the next day, just after the market opens.  This is standard tax-planning.  Whenever you have a paper gain, and you wish to lock that gain out of being taxed, you do a bed-and-breakfast transaction, the idea being to use up your annual exemption each and every year.  Of course, if your dealing costs are high, then they may outweigh any tax saved, and so it would be pointless. For the purpose of an example, let's assume that the UK tax year is the same as the calendar year. Scenario 1. Suppose I bought some shares in 2016, for a total price of Stg.50,000. Suppose by the end of 2016, the holding is worth Stg.54,000, resulting in a paper gain of Stg.4,000. Question.  Should I do a b&b transaction to make use of my Stg.11,100 annual exemption ? Answer.  Well, with transaction costs at 1.5% for a round-trip trade, suppose, and stamp duty on the purchase of 0.5%, your total costs for a b&b will be Stg1,080, and your tax saved (upon some future sale date) assuming you are a 20% tax-payer is 20%x(4,000-1,080) = Stg584 (the transaction costs are deductible, we assume).  This does not make sense. Scenario 2. The same as scenario 1., but the shares are worth Stg60,000 by end-2016. Answer.  The total transaction costs are 2%x60,000 = 1,200 and so the taxable gain of 10,000-1,200 = 8,800 would result in a tax bill of 20%x8,800 = 1,760 and so the transaction costs are lower than the tax to be saved (a strict analysis would take into account only the present value of the tax to be saved), it makes sense to crystalise the gain.  We sell some day before the tax year-end, and re-invest the very next day. Scenario 3. The same as scenario 1., but the shares are worth Stg70,000 by end-2016. Answer.  The gain of 20,000 less costs would result in a tax bill for 1,500 (this is: 20%x(20,000 - 2%x70,000 - 11,100) ).  This tax bill will be on top of the dealing costs of 1,400.  But the gain is in excess of the annual exemption.  The strategy is to sell just enough of the holding to crystallise a taxable gain of just 11,100. The fraction, f%, is given by: f%x(70,000-50,000) - 2%xf%x70,000 = 11,100 ... which simplifies to: f% = 11,100/18,600 = 59.68%. The tax saved is 20%x11,100 = 2,220, versus costs of 2%x59.58%x70,000 = 835.52. This strategy of partial b&b is adopted because it never makes sense to pay tax early ! End. "You will receive a combination of Verizon shares and cash whether you chose option B or C. Option B means that your ""Return of Value"" will be treated as capital - ie: as a capital gain. Option C means that your ""Return of Value"" will be treated as income - ie: as a dividend. As your ISA has favourable tax status, you don't end up paying any capital gain tax or income tax on dividend income. So it won't matter which option you chose." You can have a new ISA every financial year. As long as you don't take out any other ISA in the financial year that starts next week, you can use a help-to-buy ISA as your ISA for 2015/16. Existing ISAs taken out in earlier financial years will have no effect on that. An ISA is a much simpler thing than I suspect you think it is. It is a wrapper or envelope, and the point of it is that HMRC does not care what happens inside the envelope, or even about extractions of funds from the envelope; they only care about insertions of funds into the envelope. It is these insertions that are limited to £15k in a tax year; what happens to the funds once they're inside the envelope is your own business.  Some diagrams: Initial investment of £10k. This is an insertion into the envelope and so counts against your £15k/tax year limit.                 +---------ISA-------+ ----- £10k --------->              |                +-------------------+  So now you have this:                 +---------ISA-------+                |  £10k of cash     |                +-------------------+  Buy fund:                 +---------ISA-------+                |    £10k of ABC    |                +-------------------+  Fund appreciates. This happens inside the envelope; HMRC don't care:                 +---------ISA-------+                |    £12k of ABC    |                +-------------------+  Sell fund. This happens inside the envelope; HMRC don't care:                 +---------ISA-------+                |    £12k of cash   |                +-------------------+  Buy another fund. This happens inside the envelope; HMRC don't care:                 +---------ISA-----------------+                | £10k of JKL & £2k of cash   |                +-----------------------------+  Fund appreciates. This happens inside the envelope; HMRC don't care:                 +---------ISA-----------------+                | £11k of JKL & £2k of cash   |                +-----------------------------+  Sell fund. This happens inside the envelope; HMRC don't care:                 +---------ISA-------+                |    £13k of cash   |                +-------------------+  Withdraw funds. This is an extraction from the envelope; HMRC don't care.                 +---------ISA-------+ <---- £13k ---------               |                +-------------------+  No capital gains liability, you don't even have to put this on your tax return (if applicable) - your £10k became £13k inside an ISA envelope, so HMRC don't care. Note however that for the rest of that tax year, the most you can insert into an ISA would now be £5k:                 +---------ISA-------+ ----- £5k --------->               |                +-------------------+  even though the ISA is empty. This is because the limit is to the total inserted during the year. Your assumption, the need for two distinct accounts is correct.  Are you sure that the deposit was made to the same account? Since a 401(k) doesn't really have an account number, just your social security number, it may be they report it to you as though it were aggregated, but it's improper for it to be so. With respect (I mean this literally, I have the utmost respect) to littleadv's answer - the aggregation of the two accounts cannot be legitimate. If I wish to invest my Roth side into investments that grow far greater than the Traditional side, the mixing of accounts destroys this possibility. Something is either wrong, or misunderstood. Yes, this is fine: You can save up to £20,000 in one type of account or split the   allowance across some or all of the other types. You can only pay £4,000 into your Lifetime ISA in a tax year ... Example   You could save £11,000 in a cash ISA, £2,000 in a stocks and shares ISA, £3,000 in an innovative finance ISA and £4,000 in a   Lifetime ISA in one tax year. https://www.gov.uk/individual-savings-accounts/how-isas-work You might want to consider whether it is wise to be fully invested in shares. If you're going to have to dip into them for things like holidays and a car, you're taking a risk that you might have to sell when the market is low. As a basic rate taxpayer, you have a £1 000 personal savings allowance. You don't need to chase the tax break with a cash ISA, which often have poor rates. However, you should consider keeping some of your savings in cash, for example in a current account that pays decent interest on the balance. First I  assume you are resident for tax purposes in the UK? 1 Put 2000 in a cash ISA  as an emergency fund.  2 Buy shares in 2 or 3 of the big generalist Investment trusts as they have low charges and long track records – unless your a higher rate tax payer don’t buy the shares inside the ISA its not worth it  You could use FTSE 100 tracker  ETF's or iShares instead of Investment Trusts. It is allowed to transfer money between ISAs however you like in one year.  It does not count against the limit for how much you can pay into an ISA in a year, nor does it count as paying into two ISAs in the same year.  But make sure you transfer the money.  Don't withdraw it, then pay it into a new ISA. If your provider doesn't like you taking money out of one ISA while keeping another, then it's about time you found another provider. Your asset mix should reflect your own risk tolerance.  Whatever the ideal answer to your question, it requires you to have good timing, not once, but twice. Let me offer a personal example. In 2007, the S&P hit its short term peak at 1550 or so. As it tanked in the crisis, a coworker shared with me that he went to cash, on the way down, selling out at about 1100. At the bottom, 670 or so, I congratulated his brilliance (sarcasm here) and as it passed 1300 just 2 years later, again mentions how he must be thrilled he doubled his money. He admitted he was still in cash. Done with stocks. So he was worse off than had he held on to his pre-crash assets. For sake of disclosure, my own mix at the time was 100% stock. That's not a recommendation, just a reflection of how my wife and I were invested.  We retired early, and after the 2013 excellent year, moved to a mix closer to 75/25. At any time, a crisis hits, and we have 5-6 years spending money to let the market recover. If a Japanesque long term decline occurs, Social Security kicks in for us in 8 years.  If my intent wasn't 100% clear, I'm suggesting your long term investing should always reflect your own risk tolerance, not some short term gut feel that disaster is around the corner. Thanks for the answer/comments! The time-based method was something we mooted and something I almost went with. But just to wrap this up, the method we settled on was this: Every time there is an entry or exit into the fund, we divvy out any unrealised market profits/losses according to each person's profit share (based on % of the asset purchased at buy-in) JUST BEFORE the entry/exit. These realised profits are then locked in for those particpants, and then the unrealised profits/loss counter starts at zero, we do a fresh recalculation of shareholding after the entry/exit, and then we start again. Hope this helps anyone with the same issue! Note the above is only for shares. There are different rules for other assets like House, Jewellery, Mutual Funds, Debt Funds. Refer to the Income Tax guide for more details. You can't actually transfer shares directly unless they were obtained as part of an employee share scheme - see the answers to questions 19 and 20 on this page: http://www.hmrc.gov.uk/isa/faqs.htm#19 Q. Can I put shares from my employee share scheme into my ISA? A. You can transfer any shares you get from into a stocks and shares component of an ISA without having to pay   Capital Gains Tax - provided your ISA manager agrees to take them. The   value of the shares at the date of transfer counts towards the annual   limit. This means you can transfer up to £11,520 worth of shares in the tax   year 2013-14 (assuming that you make no other subscriptions to ISAs,   in those years). You must transfer the shares within 90 days from the day they cease to   be subject to the Plan, or (for approved SAYE share option schemes) 90   days of the exercise of option date. Your employer should be able to   tell you more. Q. Can I put windfall or inherited shares in my ISA? A. No. You can only transfer shares you own into an ISA if they have   come from an employee share scheme. Otherwise, the ISA manager must   purchase shares on the open market. The situation is the same if you have shares that you have inherited.   You are not able to transfer them into an ISA. "Your dec ision is actually rather more complex than it first appears. The problem is that the limits on what you can pay into the HTB ISA might make it less attractive - it will all depend. Currently, you can put £15k/year into a normal ISA (Either Cash, or Stocks and Share or a combination). The HTB ISA only allows £200/month = £2,400/year. Since you can only pay into one Cash ISA in any one year you are going to lose out on the other £12,600 that you could save and grow tax free. Having said that, the 25% contribution by the govt. is extremely attractive and probably outweighs any tax saving. It is not so clear whether you can contribute to a HTB ISA (cash) and put the rest of your allowance into a Stocks and Shares ISA - if you can, you should seriously consider doing so. Yes this exposes you to a riskier investment (shares can go down as well as up etc.) but the benefits can be significant (and the gains are tax free). As said above, the rules are that money you have paid into an ISA in earlier years is separate - you can't pay any more into the ""old"" one whilst paying into a ""new"" one but you don't have to do anything with the ""old"" ISA. But you might WANT to do something since institutions are amazingly mean (underhand) in their treatment of customers. You may well find that the interest rate you get on your ""old"" ISA becomes less competitive over time. You should (Must) check every year what rate you are getting and whether you can get a better rate in a different ISA - if there is a better rate ISA and if it allows transfers IN, you should arrange to make the trasnfer - you ABSOLUTELY MUST TRANSFER between ISAs - never even think of taking the money out and then trying to pay it in to another ISA, it must be transferred directly between ISAs. So overall, yes, stop paying into the ""old"" ISA, open a new HTB ISA next year and if you can pay in the maximum do so. But if you can afford to save more, you might be able to open a Stocks and Shares ISA as well and pay into that too (max £15k into the pair in one year). And then do not ""forget"" about the ""old"" ISA(s) you will probably need to move all the money you have in the ""old"" one(s) regualrly into new ISAs to obtain a sensible rate. You might do well to read up on all this a lot more - I strongly recommend the site http://www.moneysavingexpert.com/ which gives a lot of helpful advice about everything to do with money (no I don't have any association with them)." An investment trust is quoted just like a share. You just compare what you paid (your book cost) with its current share price, not the NAV, as a trust's price can be at a premium greater than the actual share price or a discount. Income and Capital are taxed separately in the uk.  You probably can't get dividends paid  gross even in ISA's you pay the basic rate of tax on dividends only higher rate tax payers get tax benefit from dividends. What you could do is invest in splits (Spilt capital investment trusts ) in the share class where all the return comes as capital and use up some of your yearly CGT allowance that way.