Income from ISA's and NSI Index-linked certificates and tax/benefits

merlinthehappypig

Not sure if this should be on the benefit board or this one.

I'm trying to sort out my sister's savings as her partner has recently died.

At present all her savings are in normal building society accounts. She has a part-time job and gets child and working tax credit. Any interest that she gets gets counted as income and reduces her tax credits.

I appreciate that the interest from an ISA is tax-free, but I'm not sure whether or not the interest from that can be ignored as well when declaring income for benefits.

Likewise what about Index-linked National Savings Certificates? The return on these is free of tax, I understand that, but I read somewhere that the 'index linked' bit doesn't count as income, just the 1.5% or so that is 'interest'. Again if anyone can clarify what, if any, would need to be declared as income for benefit purposes I'd appreciate it.

She doesn't have a huge amount of money, but I just want to ensure that she keeps as much of it as possible as she has no chance of saving any more as things stand.

She doesn't need to touch the money in the mdium term so can tie it up.

Any advice appreciated.

edit. apologies for the duplicate post - I don't know what happened with the title on the first one and can't delete the thread!

IGK

All returns from NS&I Index-linked certificates (interest and index-linking) are tax-free and therefore don't have to be declared on a tax return.

See the NS&I's website HERE and HERE for clarification.

Jonbvn

Hi,

ISA's and ILSC do not need to be declared on tax returns. However, I am not certain whether they would effect tax-credit. I would assume that they don't. I would recommend you post on the tax-board for a definitive response.