tax credit and isa capital

willywonka1

Hi all,


Can I claim tax credit if I have £5000 or up to £60000 in an ISA ?


Willy

rogerblack

Tax credits is not affected by savings.
Universal credit - which may be coming soon and eliminate tax credit for new claimants is, and would be eliminated by over 16K of savings or significant income.
Transitional protection may provide limited protection if you claim tax credits, and then go on to UC, but changes of circumstance may eliminate this protection.

willywonka1

Wow, thx for the fast reply, and you know that for a definite yes, as I can not find out much about this on the Government sit. Would you know when the new U.C. coming out please.

Wayne

10pence

UC is being introduced in different areas: follow the LINK to find out if coming to an area near you soon.

Note that whilst Tax Credits don't consider savings/capital, interest over £300 is considered in the calculations.

willywonka1

Hi 10pence, are you saying that if I had £15000 in an IAS, and next year without putting any money in, it went up to £17000 I could not claim tax credit ?

Willy

10pence

Yes, for Tax Credits savings/investment interest/income under £300 is ignored, above that will affect the claim.

The following is from Disability Rights website

Income and savings

What counts as income for tax credit purposes is largely the same as what counts for income tax and is similar but not identical to what counts for means-tested benefits. The general rule is that taxable income will be taken into account and other income will be ignored, although there are some exceptions.
The benefits that are ignored (because they are not taxable) include: income support, personal independence payment, disability living allowance, attendance allowance and industrial injuries disablement benefit.
Although tax credits are means-tested, they have no capital limit. This means there is no amount of savings that will automatically stop you being able to claim tax credits. Income from capital/savings can however be taken into account so as to reduce the amount of your award. There are disregards of the first £300 a year of income from capital/savings and normally of interest from PEPs, ISAs and TESSAs.
Student grants and loans are ignored apart from grants for adult dependants and lone parents.

PS, if you're getting nigh on 15% for your ISA tell me the where to stash the cash

willywonka1

Hi 10pence, yes would love to get 15% ;-) So do you mean if my isa makes £500, even thou the £200 above the £300 thats allowed is not taxed, I still have to tell the taxman? I did not think that, as I know lots of people with isa and they never put that in their tax returns, are you saying everybody has to even that thay are not taxed on the isa, they will be taxed on the gain, or am I reading you wrong.

konark

Yes, for tax credits even though the capital is ignored, the income that capital generates is still counted, above a certain limit. When Universal Credit arrives, because this has capital limits, you will not be eligible.

Get spending!

willywonka1

Hi all, and thx,

You both said diffrent there, but looks like blondebubbies is right, as it says on the Government site; Don’t include interest from tax-exempt investments like ISAs.

Willy