Receiving ISA interest monthly to a nominated non-Isa account?

JohnnyBGoodish

Hello, has anybody experience of having their ISA interest paid direct (monthly) to their own non-Isa bank account?

I am looking at having a small income from my ISA rather than continuing compounding the interest monthly in the ISA and just wanted to check I’m not creating problems for myself.

Is it correct that the monthly interest from the ISA received into my standard non-ISA bank account would not have to be declared on a self employed tax return as it has been generated from an ISA?

Is there any difference to this payment method than withdrawing the same amount generated in interest from the ISA balance monthly (a withdrawal from savings), if indeed the provider allows that easy access.

Thanks all

Bigwheels1111

I would think you would need an easy access isa, paid each month.

Then take out the interest payment. That would be tax free.

WHY.

Rate will be a lot lower, Shawbrook at 4.22% is the best I can find today.

If you took out a regular savings account that paid each month and paid the tax, IF you had to you would still be better off.

Unless your a higher rate tax payer.

Do you earn between £0.00 and £18570.00 a year, or more.

Have you used up your Person savings allowance ( PSA £1000 )

Doctor_Who

Have a look at the ISA accounts here to see if they can pay away interest (Shawbrook says you can pay the interest away). Interest from an ISA is tax free and effectively ignored by HMRC. 

Malchester

Yes you can do this. I have 3 ISAs that I have set up to have monthly interest paid into my nominated account. Two of them are fixed rate ISAs and one easy access. Some ISAs allow you to switch between compounding interest and having it paid away. 

If you check moneyfactscompare.co.uk, choose monthly interest from the drop down box at the side and then click for further details of each ISA. Some allow both, some just one option.

The funds paid out of an ISA are tax free but any interest earned once they are outside an ISA is taxable 

JohnnyBGoodish

Great, thanks for the info, looks like I can do what I needed to. The reason I'm looking at doing it this way is I've already got most of my savings in the ISA and it's still fixed for a while so can't transfer, but it seems I can switch to my own bank account for future interest payments. The links are super helpful for after this ends in October. 

Doctor_Who

JohnnyBGoodish said:

Great, thanks for the info, looks like I can do what I needed to. The reason I'm looking at doing it this way is I've already got most of my savings in the ISA and it's still fixed for a while so can't transfer, but it seems I can switch to my own bank account for future interest payments. The links are super helpful for after this ends in October. 

Just for info - you can transfer a fixed rate ISA, but you will be charged a penalty fee to do so. You can use the MSE ISA calculator to see if it's worthwhile or not (probably not for you if your fixed rate ends in October).

https://www.moneysavingexpert.com/savings/isa-switch-calc/

10bears

I have a fixed %rate fixed term ISA with Charter Savings Bank, which has been paying the monthly interest to my Current account with no problems at all.
The fixed term of that ISA is about to expire, so I am wondering if it is possible to open a new ISA and transfer the maturing ISA into it but because I don't want to exceed £85000 with any provider, add NO new money? Assuming that is possible, would I then be able to open another new ISA with a different provider and add NEW money to that.

Albermarle

10bears said:

I have a fixed %rate fixed term ISA with Charter Savings Bank, which has been paying the monthly interest to my Current account with no problems at all.
The fixed term of that ISA is about to expire, so I am wondering if it is possible to open a new ISA and transfer the maturing ISA into it but because I don't want to exceed £85000 with any provider, add NO new money? Assuming that is possible, would I then be able to open another new ISA with a different provider and add NEW money to that.

YES but be careful. 
You should get from Charter some options as to what you want to happen when the fixed rate expires.
To be safe make sure you nominate that it goes to their easy access account. Then if the transfer gets delayed there will be no problem.

Assuming that is possible, would I then be able to open another new ISA with a different provider and add NEW money to that. Yes
The same question is asked every day, as are similar ones about transfers. So worthwhile scrolling through the forum.