Cash ISA

[4stripes]

Pretty financially illiterate and trying to understand how Cash ISAs work.

Is it correct that if my income in a year is 55k, and when I submit my Self Assessment Tax Return I declare that I have 10k in a Cash ISA, then that 10k over the threshold won't be taxed?

Thanks

[Maslins]

Pretty financially illiterate and trying to understand how Cash ISAs work.

Is it correct that if my income in a year is 55k, and when I submit my Self Assessment Tax Return I declare that I have 10k in a Cash ISA, then that 10k over the threshold won't be taxed?

Thanks

Nope, not that good I'm afraid!

You putting/having money in an ISA doesn't directly impact your personal tax in anyway (good or bad).

The significance of an ISA over a "normal" savings account is that you're not taxed on the interest. So if that £10k a year later is £10.1k as you got 1% interest, the £100 isn't taxable. It would be if it was a normal savings account...though if that was all your interest it likely wouldn't be taxable anyway as covered by separate allowances.

[northernladuk]

If you say you are financially illiterate I'd spend a bit more time researching and trying to understand rather than guessing.

https://moneyfacts.co.uk/guides/isas...ash-isa120412/

[kaiser78]

If you say you are financially illiterate I'd spend a bit more time researching and trying to understand rather than guessing.

https://moneyfacts.co.uk/guides/isas...ash-isa120412/

But that's why he is asking the question, to get clarification.

[northernladuk]

But that's why he is asking the question, to get clarification.

Well yes but no.

The article I linked says

A cash ISA – or individual savings account - is basically an account that pays interest tax-free, as opposed to savings accounts on which you may pay tax,

That should give him a good idea of how to handle it.

Searching for ISA and Self assessment and the first article that pops up is

https://www.telegraph.co.uk/finance/...-debunked.html

which states

Do I have to declare any income I get from an Isa on my tax return?

No. Not only is interest paid tax-free, but you do not even have to mention income from Isa savings on your self-assessment form.