ISA and turnover on self assessment confusion

helpspooked

I am currently filling out my Self Assessment tax return and am confused as to what to do with my ISA.

I have calculated my income and put it in but I took out money from that income and put it in an ISA. Do I declare the full amount that I earned or do I subtract the money that I put into my ISA?

If I don't subtract it, how is it tax exempt? As surely I will be paying tax on the income that went into my ISA?

I hope I have explained this well enough! Very confusing for me.

p00hsticks

You misunderstand the tax advantages an ISA offers.

You have to pay tax on your earned income.

You can then put that taxed income into an ISA.

For cash ISAs any interest earned within the ISA is tax free.
For Stocks and shares ISA any profit on shares held within the ISA is not liable for Capital Gains Tax.

[Edit] I forgot to mention that another advantage of holding shares in an ISA is that you won't be liable for any additional tax on dividend payments if you are a higher rate tax payer (as you would be if held outside an ISA)

[Deleted User]

helpspooked wrote: »

I am currently filling out my Self Assessment tax return and am confused as to what to do with my ISA.

I have calculated my income and put it in but I took out money from that income and put it in an ISA. Do I declare the full amount that I earned or do I subtract the money that I put into my ISA?

If I don't subtract it, how is it tax exempt? As surely I will be paying tax on the income that went into my ISA?

I hope I have explained this well enough! Very confusing for me.

An ISA is tax free. This does not mean that you can deduct the amounts invested from your turnover, thereby reducing your profit, which is what you are suggesting.

With respect - are you absolutely confident that you will complete the self assessment return correctly? I strongly suggest that you seek professional advice, the cost of which could save you much more in the long run.

antrobus

helpspooked wrote: »

I am currently filling out my Self Assessment tax return and am confused as to what to do with my ISA.....

You don't do anything with your ISA on your tax return.

helpspooked wrote: »

...I have calculated my income and put it in but I took out money from that income and put it in an ISA. Do I declare the full amount that I earned or do I subtract the money that I put into my ISA?...

You declare the full amount that you earned.

helpspooked wrote: »

...If I don't subtract it, how is it tax exempt? As surely I will be paying tax on the income that went into my ISA?

You will pay tax on the income that went into your ISA. An ISA is tax exempt in the sense that the income generated by your ISA investment will be tax free.

Gerita

Hello,
It's my first time here.
I am thinking of opening a cash ISA and although I read much about this there is still something which is not clear to me.
So, I got that the ISA interest is tax-free and doesn't have to be declared on my tax return, does it?
Let's say that I want to pay £200 each month into my ISA account, what happens with that amount? Do I need to declare that amount to my tax return or not?
I would be very grateful if anyone explains it to me.

CLAPTON

Gerita wrote: »

Hello,
It's my first time here.
I am thinking of opening a cash ISA and although I read much about this there is still something which is not clear to me.
So, I got that the ISA interest is tax-free and doesn't have to be declared on my tax return, does it?
Let's say that I want to pay £200 each month into my ISA account, what happens with that amount? Do I need to declare that amount to my tax return or not?
I would be very grateful if anyone explains it to me.

you declare your income in your tax return

whether you spend your income on rubbish, a house or save in an ISA is irrelevant