ISA interest tax free?

refluxer

GCSCLC said:

refluxer said:

GCSCLC said:

refluxer said:

IIRC, if you want a Barclays fixed rate cash ISA to pay interest paid monthly, then having it paid away to an external account is the only option. This is the reason why I selected to have the interest paid annually, so it remains within the ISA.

Barclays current accounts don't pay interest, so those ISA interest payments won't be earning interest within the current account.

So basically because I’m paid interest monthly, I have to pay tax on it as it’s going into my current account?

No, that interest should still be tax-free so something is going wrong somewhere.

If that’s a certainty then what should I do next? Hmrc clearly aren’t going to listen to me as I already tried informing them of that. My tax code has already changed & is changing massively in april

I would double-check your figures as Eskbanker suggested and if it still looks like it's this ISA interest that is the problem, then I would probably contact Barclays and ask if (and why) they're reporting this to HMRC.

Dazed_and_C0nfused

GCSCLC said:

refluxer said:

GCSCLC said:

refluxer said:

IIRC, if you want a Barclays fixed rate cash ISA to pay interest paid monthly, then having it paid away to an external account is the only option. This is the reason why I selected to have the interest paid annually, so it remains within the ISA.

Barclays current accounts don't pay interest, so those ISA interest payments won't be earning interest within the current account.

So basically because I’m paid interest monthly, I have to pay tax on it as it’s going into my current account?

No, that interest should still be tax-free so something is going wrong somewhere.

If that’s a certainty then what should I do next? Hmrc clearly aren’t going to listen to me as I already tried informing them of that. My tax code has already changed & is changing massively in april

I think the best thing to do first is ask for the breakdown of interest banks have reported.

I think other people have reported that this include some part of the account numbers so you should be able to see if they do relate to the ISA (tax exempt Individual Savings Account)

Hoenir

GCSCLC said:

I did try to explain this to hmrc, saying that all money from Barclays was from an isa but she kept saying if its interest into bank then it counts towards savings allowance. Really don’t fancy another hour on hold to have that conversation again!

Because as far as the HMRC is concerned they've been informed that you have received taxable interest. 

jimjames

Is it possible in previous years you had money that was earning interest outside the ISA and that is what generated the tax code change? Barclays ISA 55 looks like a very current one so wouldn't have been reported for the 23/24 tax year.

FrugaiMacDugal

Is this your ISA?

GCSCLC

FrugaiMacDugal said:

Is this your ISA?

Yes this is

Ozzig

From the Barclays app,
Manage Accounts > Credit Interest Summary > pick the year > tick each / all the accounts listed and Online(Cloud) > Confrm

That'll generate a letter detailing what interest has been paid for the select tax year, it's stored in Statements and documents > Documents

You can see what's been paid etc

AstonSmith

refluxer said:

IIRC, if you want a Barclays fixed rate cash ISA to pay interest paid monthly, then having it paid away to an external account is the only option. This is the reason why I selected to have the interest paid annually, so it remains within the ISA.

As an interesting aside, I noticed that when I transferred my ISA away from Barclays (which was monthly payout), the new provider suggested I had more allowance available than I paid in. e.g. £10000 paid in that year, £500 paid in interest, remaining allowance = £10500.

So it appears that you could transfer those monthly Barclays interests right back into the ISA...?

refluxer

AstonSmith said:

refluxer said:

IIRC, if you want a Barclays fixed rate cash ISA to pay interest paid monthly, then having it paid away to an external account is the only option. This is the reason why I selected to have the interest paid annually, so it remains within the ISA.

As an interesting aside, I noticed that when I transferred my ISA away from Barclays (which was monthly payout), the new provider suggested I had more allowance available than I paid in. e.g. £10000 paid in that year, £500 paid in interest, remaining allowance = £10500.

So it appears that you could transfer those monthly Barclays interests right back into the ISA...?

I would guess that this is a mistake and could be something to do with the flexible nature of the Barclays ISA but monthly interest paid away to the current account shouldn't count as a withdrawal, so paying it back into the ISA would actually count again towards your ISA allowance.

Even if that wasn't the case, I'm still not sure why your new provider would state that you've got that additional £500 allowance, as money withdrawn from a flexible ISA needs to be replaced in that same (ie. Barclays) ISA before being transferred away, so you wouldn't have access to that extra £500 allowance in the new ISA anyway.

Edit : Hang on. Thinking about it - as the minimum term for the Barclays flexible ISA is 1 year, the allowance for the year it was taken out would be irrelevant anyway as you'd be into the next tax year when you transferred away... or did you transfer out before maturity ?

jimjames

refluxer said:

AstonSmith said:

refluxer said:

IIRC, if you want a Barclays fixed rate cash ISA to pay interest paid monthly, then having it paid away to an external account is the only option. This is the reason why I selected to have the interest paid annually, so it remains within the ISA.

As an interesting aside, I noticed that when I transferred my ISA away from Barclays (which was monthly payout), the new provider suggested I had more allowance available than I paid in. e.g. £10000 paid in that year, £500 paid in interest, remaining allowance = £10500.

So it appears that you could transfer those monthly Barclays interests right back into the ISA...?

I would guess that this is a mistake and could be something to do with the flexible nature of the Barclays ISA but monthly interest paid away to the current account shouldn't count as a withdrawal, so paying it back into the ISA would actually count again towards your ISA allowance.

My understanding is that for a flexible ISA interest taken out does count as a withdrawal so you can add it back in if removed during the tax year and that transfer/replacement balances show this amount.