Does Interest on Cash ISA count towards ISA allowance?

I opened an Cash ISA account with 20000 pounds, which is the yearly limit. At the end of the first month, I've earned ~20 pounds interest, and it's been paid into the same ISA account. Have I now exceeded my ISA limit because I have 20020 pounds in the account?

Hi,

No, as interest does not count as paying funds in.

Thank you.

Hi I opened a 1-year fixed term cash ISA account in the tax year 2023-2024. I was told I was to receive monthly interest by cheque since I did not have any personal account in that said bank. I understand any interest generated from an ISA account is tax-free. But in my case, I wonder how the tax-free is guaranteed if I deposit cheques to another bank (non-ISA account)? Does it mean I do NOT need to report my earned interest from the ISA account to HMRC? And theoretically, if the interest earned from the ISA account can be deposited into the same account (e.g. 100pounds interest earned) in 2023-2024 tax year and I get 20,100 pounds when the account matures, does it mean I can have a capital of 20100 + 20000 = 40100 pounds in a new ISA account opened in the next tax year? Thank you in advance for any reply

Hi,

The interest from the ISA is normally paid straight back into the same account. As it's a cheque going to another account, it would just show as a deposit being made by you and no reference to it being an interest payment. You would therefore only declare any interest that is then generated from the deposits made to the non ISA account.

Thank you.

I understand that interest paid from an ISA does not count as paying funds in. Does that mean that if I, say, have a 3 Year Fixed Rate ISA that pays interest monthly then, rather than paying the interest into my bank account, could I ask for it to be paid into an existing easy access ISA account? IE So I have access to the interest from the Fixed ISA yet the interest on that remains tax free?

Hi
This is something you would need to discuss with your ISA provider.

Hi Sorry but can someone tell me what happens with the interest on an ISA. I have a fixed rate 2 year ISA and have accumulated one year’s interest? When can this interest be withdrawn without affecting the ISA as no withdrawals allowed within the 2 years of the fixed term? Is it only at the end of the 2 year period? Thanks

Hi,
That is between you and the provider.
Thank you.

hello, if i have £100,000 in a 5% AER cash ISA, that means annually I would be getting £5,000 from the interest. I understand it is tax free but would this need to be declared anywhere? ie does this go towards my annual income even though it’s tax free?

Hi b-c,
Interest earned in an ISA is tax free and does not need to be declared.
Thank you.

If I move £85000 (four years of £20000 ISA deposits plus interest accrued during that time) plus £20000, for the coming financial year, to a new provider for the next financial year, would I be exceeding the allowance/zero tax limits?

Please see the guidance here:Individual Savings Accounts (ISAs): Transferring your ISA - GOV.UK

I'm making 105000 in a year and I'm looking for ways to pay less tax on my income. Will I pay less taxes if I put 20000 in Cash ISA? Does it make any difference if the money is on a savings account or in Cash ISA?

Hi Vin,
Interest from an ISA is tax free.
Interest from other sources counts towards your personal savings allowance and is taxable.
Thank you. 

Hello. I have a question about interest earned on a cash ISA. I opened a cash ISA with Coventry BS in September 2024 £20000 was deposited. I elected to have my interest paid monthly directly into my Lloyds current account rather than let it mount up. I have just found out that the interest I have received over the last 5 months has actually reduced my tax free sum by £392. Although I still have £20000 in the account and get interest on that, the tax free sum has reduced to £19608. I can pay the in the £392, as its flexible but I will never actually be able to draw the interest as it taken off the tax free sum. I didn't think the interest affected the tax free sum Is this correct.

Good morning - I have only recently become aware of a mistake I have made with ISA allowance rules....I have paid £20,000 each into two ISA accounts during this tax year, one in which I opened from scratch and the other I already had. I did not transfer in from another ISA. Should I close one of the accounts now and leave the other open?

Hi ,
 

Please contact the Coventry BS to check the terms for the particular ISA that you have invested in . Thank you .

Hi Savvyornot,
If you have oversubscribed in the current tax year, you can contact your ISA provider to instruct them to remove overpayment amounts to correct the error.
If the error occurred in a previous tax year you should not do anything.You should not attempt to correct the situation.
HMRC will write to you after the end of the tax year in question if appropriate. 
Thank you.

Thank you for your advice.