Quick Question on Cash ISA Interest

Cardinal-Red

Hello all!

The wife and I are in full house deposit saving mode for when the time is right to buy. We've just managed to fill our 08/09 Cash ISA allowances with the full £3600 each.

This month though A&L paid an interest payment into our accounts. It's not much but seeing as we have paid in the maximum I was wondering how this interest is allocated? Does it count as part of your contributions for any tax year? Or is it outside of the limits?

Also I know some people live off their interest (oh to have that much capital ) and so withdraw it; but if we live it in there, does it also count towards any year's allowance?

This is semi important as even though we have filled our allowances this year, we've built up a small (and growing for the next 3 months) non-ISA balance which we obviously want to transfer into new ISAs in April, but don't want to exceed any allowances.

Thanks all!

Lokolo

Interest does not count towards allowance Its awesome because when you have enough in ISAswith a decent rate you get a free ISA each year through interest.

EalingSaver

Lokolo wrote: »

...Its awesome because when you have enough in ISAswith a decent rate you get a free ISA each year through interest.

?????? What would be the point of that????? Just leave the interest in the original ISAs and put NEW capital into your new year ISA.

Calchas

I think Lokolo is merely extolling the virtues of compound interest Ealing Saver.

I don't believe he is suggesting missing a year. :eek:

Woe betide!

Lokolo

^^ indeed that is correct. Meaning you would gain 1 Cash ISA each year through interest, plus + Cash ISA each year through depositing more money.