ISA's.. How much can I save before getting taxed?

alberto2012

Hi all,
1st post. So apologies if this has been asked before or obvious question.

I have had an online ISA 'saver direct' with Bank of Scotland for about 1yr and a half now..
The interest rate is something pathetic like 0.5%..

I stupidly have only been made aware that if you have more than £11,280 saved then you are liable to be taxed?
I have been luck enough to be able to save recently, and currently went over this limit ...

So what are my options? Take out the difference and open a new ISA (allowing me to save more tax free?

I have naively been ignorant to small details and is about time I opened my eyes!
Hope someone can give me some advice..
Thanks

pqrdef

You were allowed to pay in £5100 in the 2010-11 tax year, and a further £5340 in 2011-12, and a further £5640 in 2012-13.

If you've exceeded those limits, the bank should have rejected the excess. So you may well be OK.

calypso_rhapsody

The previous post tells you the limits for saving each year - note that this is the amount you put in .... if you've taken some out and then saved more, you have to look at the total deposit in the tax year, not the net saving.

You need to transfer that ISA to one with a better rate - look on the savings section of this site .... look for ones that accept transfers in as not all do. Then do the transfer by opening the new account and filling in the transfer form - do NOT take the money out of the existing ISA and open a new one - you will lose the tax shelter over the current year's entitlement.

Good luck!

alberto2012

Ah ok..
So its actually 'each year' that the limit comes in to play.
as you said £5100 in the 2010-11 tax year, and a further £5340 in 2011-12, and a further £5640 in 2012-13.

The bank have not rejected any inputs so I should be ok.
So there is no upper limit to how much is in the account, as long as I do not put in more than £5640 this tax year?...
Thanks for the info :T


Another quick question.
How is the tax worked out. i.e. is it the interest that is taxed at 20%? (even though its not much)

Thanks

ceh209

Another quick question.
How is the tax worked out. i.e. is it the interest that is taxed at 20%? (even though its not much)

There is no tax on the interest, that's the whole point of the ISA (and why there's a limit to how much money you can put in each year)

p00hsticks

alberto2012 wrote: »

Another quick question.
How is the tax worked out. i.e. is it the interest that is taxed at 20%? (even though its not much)

Thanks

If it's an ISA, then there is no tax to pay - that is the advantage of an ISA, and why there is a limit to how much you can put in each year.

If it's not an ISA but an ordinary savings account ,then 20% tax is normally deducted by the bank from the calculated interest before it's paid to you. If you are a non-tax payer, then you can fill in a form (R85) for the bank declaring that you are not liable for tax and the bank can then pay your interest gross. If you are a higher rate tax payer, then the bank will still only deduct 20% tax, and it's your responsiblity to get in touch with HMRC to let them know that you owe some tax on your savings interest.

0.5% is a very low interest figure for an ISA - shop around and see if you can do better. But whatever you do, don't try to do the transfer yourself. In order to preserve the tax free 'ISAness' from previous years, you need to ask the new ISA provider to arrange for your old one to be officially transferred across to it (making sure the new provider accepts transfers in).

thenudeone

There is no limit to the BALANCE in a Cash or stocks & shares ISA account; it's possible to have six figures invested if you've used all the allowances every year. The interest / growth is all tax free.

The only limit is the NEW MONEY you are allowed to put in each year.