Tax on interest from S&S ISA?

obsessed_saver

Hi guys,
I recently started a S&S ISA, but haven't quite bought anything yet so, there was a very small interest paid to my account for the cash balance. The interest was taxed. Is this right?


Cheers.

Lokolo

Not quite sure. I would assume so because it isn't actually in the S&S ISA but I should think, a regular account.

For instance, you open up a S&S ISA, you put cash into a temp account before you choose shares or whatever, however, this cannot be a S&S because you aren't investing yet, and cannot be a cash ISA because it can't (if you had subscribed to a cash ISA then of course having 2 would be illegal as such, only reason I can think of).

jem16

obsessed_saver wrote: »

Hi guys,
I recently started a S&S ISA, but haven't quite bought anything yet so, there was a very small interest paid to my account for the cash balance. The interest was taxed. Is this right?


Cheers.

Yes it's correct. Interest on cash held within a S&S ISA is taxable.

earlgrey_3

jem16 wrote: »

Yes it's correct. Interest on cash held within a S&S ISA is taxable.

And share dividends within a S&S ISA are subject to tax at the normal rate for dividends for non-higher rate payers, i.e. the tax credit can't be reclaimed.

debbie42

earlgrey wrote: »

And share dividends within a S&S ISA are subject to tax at the normal rate for dividends for non-higher rate payers, i.e. the tax credit can't be reclaimed.

The same applies outside of an ISA, for dividends.

david78

Technically its a 20% charge and not tax that's paid on interest earned on cash in a stocks and shares ISA. The "charge" doesn't need to be declared on annual tax returns. Higher rate tax payers, who would normally pay tax at 40% on savings interest, have nothing more to pay.

obsessed_saver

Thanks for clearing that up, everyone.