Tell us you cash ISA questions

soulsaver

XRocker said:

Hi
I have something which caught me out recently.
I have a current account which paid interest and a savings account which paid interest.
I received a letter from HMRC that said I had paid too little tax.
Their calculation showed that I had gone over my personal savings allowance.
I had thought that the personal savings allowance only applied to savings accounts.
But I was wrong.
Has anybody else been caught out this?
Thanks.

No..............

masonic

I certainly didn't have that on my bingo card of cash ISA questions.

jimjames

XRocker said:

Has anybody else been caught out this?
Thanks.

If you've exceeded the £1000 PSA limit thanks to current account interest then you might want to review how much you're keeping in your current account unless it's one that's paying 4% or so.
But to answer your question, no I've not been caught out by it. Any interest is included, other sources you might need to consider are gilts and other investments paying interest too.

Kim_13

XRocker said:

Hi
I have something which caught me out recently.
I have a current account which paid interest and a savings account which paid interest.
I received a letter from HMRC that said I had paid too little tax.
Their calculation showed that I had gone over my personal savings allowance.
I had thought that the personal savings allowance only applied to savings accounts.
But I was wrong.
Has anybody else been caught out this?
Thanks.

The personal savings allowance applies to any interest, irrespective of where it came from - HMRC won’t even be told whether it was a current account or a savings. Interest from ISAs is exempt, so you might wish to move it into one of these instead - remember there’s a £20,000 limit per tax year across all types of ISA, and that your money is only protected up to £85,000 with each institution.

Looking at all of your accounts, do you agree that their calculation is correct? It wouldn’t be that unusual for it to be wrong.

Another factor is that all the interest is added to your earnings, any dividends etc to determine your taxable income - if the total takes you into Higher Rate Tax, you would only have a £500 PSA rather than the usual £1,000.

XRocker

masonic said:

I certainly didn't have that on my bingo card of cash ISA questions.

I know it wasn't a specific cash isa question, however it was a question related to tax fee savings, but thanks for reading my question

XRocker

jimjames said:

XRocker said:

Has anybody else been caught out this?
Thanks.

If you've exceeded the £1000 PSA limit thanks to current account interest then you might want to review how much you're keeping in your current account unless it's one that's paying 4% or so.
But to answer your question, no I've not been caught out by it. Any interest is included, other sources you might need to consider are gilts and other investments paying interest too.

I have a Santander Edge Up Current Account, I kept the maximum amount in it to get the full interest, I also have a savings account and Cash ISA, thanks for answering my question.

XRocker

Kim_13 said:

XRocker said:

Hi
I have something which caught me out recently.
I have a current account which paid interest and a savings account which paid interest.
I received a letter from HMRC that said I had paid too little tax.
Their calculation showed that I had gone over my personal savings allowance.
I had thought that the personal savings allowance only applied to savings accounts.
But I was wrong.
Has anybody else been caught out this?
Thanks.

The personal savings allowance applies to any interest, irrespective of where it came from - HMRC won’t even be told whether it was a current account or a savings. Interest from ISAs is exempt, so you might wish to move it into one of these instead - remember there’s a £20,000 limit per tax year across all types of ISA, and that your money is only protected up to £85,000 with each institution.

Looking at all of your accounts, do you agree that their calculation is correct? It wouldn’t be that unusual for it to be wrong.

Another factor is that all the interest is added to your earnings, any dividends etc to determine your taxable income - if the total takes you into Higher Rate Tax, you would only have a £500 PSA rather than the usual £1,000.

Thanks for answering my question, I did check their calculation and it was correct, I added up the amounts of interest I earned and I did go over the personal savings allowance.

Fatboydel888

Do I need to wait until my current cash ISA matures before I can transfer it into a new one?

Barralad77

Fatboydel888 said:

Do I need to wait until my current cash ISA matures before I can transfer it into a new one?

Unless yours has different rules to mine, then no. All that will happen is that you will have some interest deducted from the balance before it transfers. Give them a call and ask them how much you would lose and then you can decide whether it will be worth doing.

slinger2

Fatboydel888 said:

Do I need to wait until my current cash ISA matures before I can transfer it into a new one?

Check the T&Cs. Many fixed rate cash ISAs have big penalties for withdrawing/transferring early.