Withdrawing ISA generated interest - tax implications

Marquise

With interest rates having jumped up so much in the last year, I will fall foul this tax year of exposure to income tax on interest earned from a traditional Instant Access Savings Account that I keep for "emergencies".  This even after applying the various savings allowances.  

I am semi retired, so would like to make use of the now significant interest earnings from these savings, to boost my income, rather than draw down on my SIPP pension.  I immediately thought I'd better open an easy access ISA now and top up after April.  

Can you confirm - if I withdraw the interest accrued on my ISA (i.e. keep the invested amount fixed and take out the interest earned each year) - does that withdrawal have any impact on income tax - i.e. do I have to declare it on my tax return or is it completely excluded from income because it came from within an ISA?

Ayr_Rage

All ISA interest is free from tax and does not need to be declared.

masonic

If interest was credited within the ISA, then withdrawn, the withdrawal changes nothing. Only further sums of interest earned on the interest after withdrawal would need to be counted towards your taxable income.

Marquise

Excellent, then given these new Easy Access ISA's pay as much interest as instant access savings account, seems the way to go to keep funds reasonably available and avoid paying tax (now the rates are soo much higher)

Reed_Richards

All withdrawals from ISAs are free from tax, be they of interest generated in the ISA or of capital in the ISA.