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Maturing ISA Questions - Tax charged on interested earned when moved to another account
Comments
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Harpy_leaf said:Keep_pedalling said:There is no tax on anything drawn out of an ISA, and there is no limit on how much you can transfer from one ISA to another. The 20k limit applies to any new money added to an ISA.Remember the saying: if it looks too good to be true it almost certainly is.1
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Hi all, I have a similar question.
I was about to open a 5-year Fixed Cash ISA, opting for monthly interest and that interest being paid each month out of the ISA to my current a/c. However on the online application to open the ISA, it says "Please select where interest payments should be made. If you pay your interest away then it will no longer be in the ISA and going forward will be subject to UK tax."
I would hope to earn about £1200 in interest each year from this ISA. Does the wording imply that that £1200 would be taxable if not kept within the ISA (ie compounded) and paid out to another ordinary a/c - as a basic rate taxpayer that would be 20%. Or does it mean if I put that £1200 cash amount earned from the ISA into an interest-bearing a/c like an ordinary savings account, if the interest on that amount goes above £1000 in the year then tax would be payable.
I just think the bank wording is confusing. Any help would be much appreciated. Ive never heard Martin answer this question directly.0 -
That's effectively the same question asked previously in the thread - anything inside the ISA wrapper isn't taxable, but once removed from it (the act of which doesn't in itself trigger any tax liability), anything subsequently earned on that money is subject to income tax.0
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eskbanker said:That's effectively the same question asked previously in the thread - anything inside the ISA wrapper isn't taxable, but once removed from it (the act of which doesn't in itself trigger any tax liability), anything subsequently earned on that money is subject to income tax.0
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PCulbert1 said:eskbanker said:That's effectively the same question asked previously in the thread - anything inside the ISA wrapper isn't taxable, but once removed from it (the act of which doesn't in itself trigger any tax liability), anything subsequently earned on that money is subject to income tax.0
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PCulbert1 said:Hi all, I have a similar question.
I was about to open a 5-year Fixed Cash ISA, opting for monthly interest and that interest being paid each month out of the ISA to my current a/c. However on the online application to open the ISA, it says "Please select where interest payments should be made. If you pay your interest away then it will no longer be in the ISA and going forward will be subject to UK tax."
I would hope to earn about £1200 in interest each year from this ISA. Does the wording imply that that £1200 would be taxable if not kept within the ISA (ie compounded) and paid out to another ordinary a/c - as a basic rate taxpayer that would be 20%. Or does it mean if I put that £1200 cash amount earned from the ISA into an interest-bearing a/c like an ordinary savings account, if the interest on that amount goes above £1000 in the year then tax would be payable.
I just think the bank wording is confusing. Any help would be much appreciated. Ive never heard Martin answer this question directly.
The only thing the bank is warning you about is that once the money leaves the ISA, it can start earning new interest in that other account, for example by being paid out into an interest-paying current account, and that new interest might be taxable if your total non-ISA interest goes over your Personal Savings Allowance.
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