Question re ISA interest

Looeess_2

This has probably been asked a thousand times already, but I haven't spotted the post - sorry!

I saved £3000 into an NS&I ISA in 06/07 and received interest. I didn't manage to save anything into this or any other ISA account in 07/08. I have now received my statement for 07/08 noting interest accrued.

Is this second amount of interest still tax-free? Or will I need to pay tax on it?

Thanks,

earlgrey_3

Everything in your cash ISA is tax-free for as long as it's there, including subsequent interest and the interest on the interest.

espresso

If you haven't paid money into your Cash ISA for a whole tax year e.g. 07/08, you will need to get your ISA reactivated, before you can pay money in again.

siber

Would you clarify that for me please espresso?

I deposited £3k in a 6.05%AER NS&I cash ISA in 06/07 in anticipation of finishing my degree and getting a job - thus having to pay tax on my savings accounts.

Then, in 07/08 the base rates went up, meaning my ICICI savings account paid out better (tax-free, gross interest) rates than the ISA, so I ignored my ISA account in favour of my savings account, knowing I could transfer my max allowance at any time. I still haven't gotten this job I'm aiming for (due to slow admin issues) but now ICICI rates have dropped and I may get this job imminently. Therefore, I decided to stash as much as my savings away in tax-free accounts, so deposited 3K in a 6.5% AER Barclays Tax Haven ISA on March 27th 2008.

This was followed up by a further 3.6K into the Barclays ISA on April 7th, lumping 6.6K away from the taxman in anticipation of losing tax-free rates on my savings account.

Does your above statement mean that I may have problems accessing my NS&I cash ISA because it's been deactivated? Although not a best rate, it's better than ISAs with other providers that accept previous year's transferring in.

espresso

siber wrote: »

Would you clarify that for me please espresso?

See here and here

Does your above statement mean that I may have problems accessing my NS&I cash ISA because it's been deactivated?

If you made an electronic transfer to your old ISA now, it would most likely be returned to you, if it was inactive.

...........

siber

Thanks espresso! Much appreciated! :money:

Mikeyorks

siber wrote: »

Does your above statement mean that I may have problems accessing my NS&I cash ISA because it's been deactivated?

This is the relevant bit :

if you do not subscribe to your cash ISA for a whole tax year or longer, you will be required to sign a fresh declaration before any further subscriptions can be added.

..... which simply translates that you can access the cash / they will continue to add interest etc .. with no problem. But you can't add more money without the fresh 'declaration' (to the effect you haven't contributed to any other cash ISA in the same year you re-apply to NS&I)