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I'm about 6 cans of Monster away from understanding what any of this means.
I understand the allowance (it's made up of a cash portion and a S&S portion or something).
What I don't understand is where I'm being taxed when I use an ISA cash product versus a Bonus Saver cash product.
For arguments sake, if I stick £5k into a Bonus Saver at 4% versus doing the same with an ISA - what's the practical difference? Am I supposed to declare the interest earned as income or something with one of them and not the other?
hippy-
Am I supposed to declare the interest earned as income or something with one of them and not the other?
Yes. You will be taxed on the interest on the Bonus Saver, but not for the ISA. If you have a stocks and shares ISA, any gains you make will not be subject to capital gains tax.
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Yes. You should declare the interest earned on your tax return.
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What I don't understand is where I'm being taxed when I use an ISA cash product versus a Bonus Saver cash product.
Because you've already paid tax on the cash that you've transferred into your cash or S&S ISA?
I did self assessment a couple of times to cover some freelance work and didn't have to declare any interest or dividend payments that were inside my ISAs.
andyp
t-v
peter_h
You have an annual ISA allowance, you can invest that each year into an ISA of your choice. You don't get any tax rebate on what pay into an ISA but when you get the money out again you don't incur income or ctg tax. You don't need to include this on your tax return.
You get tax relief (up to a point) on your pension contributions but then you pay income tax when you come to draw down on your pension.