Cash ISA & Tax Credits

daz134

Hello

Im looking for some advice please....

Im thinking of opening a cash ISA and paying about £5400 into it. The problem i have is that i receive Tax Credits, If i was to open a cash ISA and provide my National Insurance Number does that men they would drop my tax credits? Or would they be effected in anyway?

I would be grateful for any advice.

Thanks

Consumerist

My understanding is that tax credits are based on income, not capital. So whilst the savings themselves (the cash in the ISA) should not affect tax credts, the interest earned on the ISA may need to be declared (e.g. if your total "other income" is more than £300 pa).

You can get more information on tax credits from the HMRC website.

cing0

Just like a tax return (SA100), the tax credits claim form (TC600) and renewal (TC603) ask you to ignore ISAs. In summary, no affect on your tax credits.

thor

When the tax credits are replaced by the Universal Credit then all will be changed as they are means tested and do include ISA savings. So above a certain limit your entitlement will be reduced or eliminated altogether. This is despite Ian Duncan Smith saying that nobody getting tax credits now will lose out under Universal Credits.

Jonbvn

Income from ISA's and NS&I tax-free products do not have to be declared for WTC's.

thor

Jonbvn wrote: »

Income from ISA's and NS&I tax-free products do not have to be declared for WTC's.

That is my point exactly. I think that the WTC's replacement, Universal credit will take these into account so there are people who are going to lose out and this will contradict IDS's statement that nobody will be worse off.