Help, please
I have an ISA, but am trying to build up enough to add to the ISA next year in an e-saver which deducts tax from it but it appears HMRC then deduct tax again. Is this the case?
I know nothing about the blOOdsy things - but I sold mine two months ago - they were only making 0.5% interest. I am now in a 123 current account and it has made me a bit of interest - bigger than the ISA.
I'm surprised that the HMRC want to deduct tax again unless the amount that is deducted at source from the e-saver account is too low or relative to your income. There are a lot of e-savers that pay on a gross basis - for example the Post Office who pay 1.4% gross for the 1st year reverting to 0.75% thereafter - they can take from £1 to 2 million....
I believe you can only hold one such account at any one time (plus one joint account).
What kind of ISA do you have? You say you're building up savings to add to your ISA - why not just put the money you don't need immediately into the ISA and get the tax-free benefits straight away? Most ISAs let you deposit whenever you like, but a lot have restrictions on withdrawals.
Tax from you E Saver should be deducted and the time the interest is paid and extra tax should only be due if you are a higher rate tax payer and should be done through a tax return.
How does it appear that HMRC are taking more?
I'm fairly sure that most bank accounts deduct tax from interest at source, so no need to pay additional tax - unless you're a higher rate tax payer.
I'm confused when you say it appears that tax is being deducted again - can you clarify this please ??
As for the number of ISA's you can hold, there are limits on the number of ISA accounts you can subscribe to each tax year. You can only put money into one cash ISA and one stocks and shares ISA.
You can hold more than one ISA, as you can subscribe to a different one each year, if you so wish.
I'm still not sure on your concept of being taxed twice ??
Anything in the ISA is tax free.
When you earn interest in your e-saver, it'll be taxed accordingly, each tax year, so, say for example, you hold it for 2 tax years, you'll be taxed twice - which is the norm .......