ISA annual allowance of £20k

If I choose to deposit £20k cash into my ISA account in Bank X in year one and then another £20k cash into the same ISA account in the same bank in year two, I would be most grateful for any advice you may give on the following questions: 1. In year one interest income from £20k cash is tax free while in year two all interest income from £40k (accumulated balance) is also tax free. That is, the tax free £20k annual allowance could be accumulated year by year, £60k for year three and so on. Is this correct? 2. In year one Interest income from £20k cash is tax free while in year two only 50% of interest income from £40k (sitting in the ISA account) is tax free. That is, the tax free £20k annual allowance could NOT be accumulated year by year and total tax free annual allowance will be capped at £20k each year. Is this correct?

Hi,
 

The £20,000 limit only applies to the amount you can put in each year. Any interest earned whilst the money is in the ISA is not taxable. See link: Individual Savings Accounts (ISAs)    . Thank you.