ISA Tax

[Kloof]

Why does the Legal & General deduct tax from my monthly ISA income?

[dzug]

If you have a stocks and shares ISA but hold cash in it there is a charge (technically not a tax but it comes to the same thing) of 20% on any interest earned on the cash. It's an incentive to invest the money which is only allowed there temporarily until you decide what to do with it.

If you have a mini-cash ISA then they shouldn't be deducting tax.

[antiguru]

I suspect that this is because you have a Managed Monthly Income ISA and you are taking money out of it as income. I�ve looked at the product details on the website for this and I cannot see where they advise that they would do this. I would therefore take this up with L&G and ask them to point out when they advised you of this deduction.

If this is the explanation and you can do without the income, leave it in the ISA wrapper to ensure no taxation.