ISA faux pas

Marksfish

I opened an ISA last year with some inheritance money I received. Interest has been paid this month (yippee), but to another savings account I hold in the organisation (boo). I have looked into this and it would seem, that for whatever reason, I nominated another account for the interest to be credited. Maybe I thought that as I was putting the maximum in for the year, I misunderstood and thought the interest couldn't be added, I really don't know. Am I right in thinking that even though the interest was gained in a non tax paying account, as it has been credited to a normal savings account I will now be liable for it to be classed as a part of my allowance? I have learned from this lesson and ensured all future interest is credited to the ISA, but more than a little annoyed with myself at the moment.

Thanks

Mark

wmb194

https://forums.moneysavingexpert.com/discussion/6672226/isa-faux-pas

"Am I right in thinking that even though the interest was gained in a non tax paying account, as it has been credited to a normal savings account I will now be liable for it to be classed as a part of my allowance?"

Which allowance? The zero% savings allowance? No, it was earned tax free in an Isa and it remains tax free and doesn't form part of your taxable income even though it was paid away to a taxable account.

Woodstok2000

The interest is not part of your allowance - it is tax free as it came from an ISA and was earned inside the tax wrapper.

Now it's outside the tax wrapper, any further interest you earn on that interest may be subject to tax if above your zero rate allowance.

Marksfish

Thanks both of you for replying. That is a weight of my mind.