Please could someone explain ISAs to me!

[Yoyoyo1]

I know that you can put £20,000 tax free in an ISA in a financial year. Does this mean that you can put another £20,000 tax free in the next financial year? So effectively, you have £40,000 in your ISA tax free?

Yes its an annual allowance. Each tax year you can put in up the allowed amount

Yes, you can put £20,000 in each tax year.

Start one now and you can put £20k in immediately then another £20k in in April.

This isn’t like the “tax free” pension contributions though, you fund it out of taxed income, it’s any subsequent growth or interest in it which is tax free.

Yes, put £20k (or whatever you have) in now if you have it, before the tax year ends in April.

After the new tax year starts, dump another lump sum in or start saving gradually into it.

If you wish, take one out now with Provider A and take one out after April with Provider B. Check out Martin Lewis web site for interest rates and advice.

Great, thank you. I thought so but just wanted to confirm. Can anyone recommend a good Cash ISA as the moment?

Martin Lewis web site or
start looking at the financial pages of the newspapers. The Daily Mail is good on a Wednesday or Thursday - I’m not sure which.
When in town check out building societies. Pick up their leaflets. Talk to their staff.
Decide if you want to leave money untouched for a year, pay in regularly or whatever you are most comfortable with.

Barclays and virgin money are both good.

Use a Stocks & Shares ISA for money intended to be left a long time, 5+ years.

Cash ISA will lose to inflation. Rates are not great, so use taxable savings accounts for some money if rate on offer is higher and if you have personal savings allowance available.

You can open a new one every year or use the same one.

So if you have a Barclays one and only put in 3k in the same financial year you cant put 2k into a different one.

But could put 3k one year into Barclays and 2k into a different account after a year.