Cash ISA savings from yearly income

Joolshornet

If I contribute some of my income to a cash ISA will this be deducted before my tax is calculated?  I wanted to understand if doing this to take my net income below personal allowance threshold means I would then not pay income tax.  Thanks 

sammyjammy

No it won't be, you'll pay tax on your earning, you just won't pay more tax on the interest in the ISA should it otherwise be due.

Catplan

No you would pay into the ISA after deductions from your take home pay.

eskbanker

Joolshornet said:

If I contribute some of my income to a cash ISA will this be deducted before my tax is calculated?  I wanted to understand if doing this to take my net income below personal allowance threshold means I would then not pay income tax.  Thanks 

As above, no is the short answer, but are pension contributions possibly appropriate instead?

Joolshornet

eskbanker said:

Joolshornet said:

If I contribute some of my income to a cash ISA will this be deducted before my tax is calculated?  I wanted to understand if doing this to take my net income below personal allowance threshold means I would then not pay income tax.  Thanks 

As above, no is the short answer, but are pension contributions possibly appropriate instead?

Thanks I'll take a look at that 

Dazed_and_C0nfused

Joolshornet said:

If I contribute some of my income to a cash ISA will this be deducted before my tax is calculated?  I wanted to understand if doing this to take my net income below personal allowance threshold means I would then not pay income tax.  Thanks 

Only certain methods of contributing to a pension will achieve that.

If you contribute to a pension using the relief at source method the contribution does not reduce your taxable income and for a low earner won't make any difference to the tax you pay.

You would though get 25% added to your (net) contribution.  Which is 20% of the gross contribution.

SIPP's, personal pensions and some employer schemes all use relief at source.