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Do I have to pay tax on savings?

If I earn £100000 a year before tax and put £10000 of that money into an ISA do I have to pay tax on that £10000? Similarly, if I put £10000 of it in a savings account do I have to pay tax on it? I'm honestly not sure- I never learnt this in school or anything but I'm guessing the answer is yes?
Original post by Trapz99
If I earn £100000 a year before tax and put £10000 of that money into an ISA do I have to pay tax on that £10000? Similarly, if I put £10000 of it in a savings account do I have to pay tax on it? I'm honestly not sure- I never learnt this in school or anything but I'm guessing the answer is yes?


You only pay tax on interest not the money itself and you only get tax if the interest is over £1k now i believe so you've nothing to worry about.
Reply 2
Avatar for Reue
Reue
20
Original post by Trapz99
If I earn £100000 a year before tax and put £10000 of that money into an ISA do I have to pay tax on that £10000? Similarly, if I put £10000 of it in a savings account do I have to pay tax on it? I'm honestly not sure- I never learnt this in school or anything but I'm guessing the answer is yes?


I think youre confusing ISAs with Pensions.

Contributions to pensions are taken before income tax deductions.

Contributions to ISAs are taken after income tax deductions.
Original post by Trapz99
If I earn £100000 a year before tax and put £10000 of that money into an ISA do I have to pay tax on that £10000? Similarly, if I put £10000 of it in a savings account do I have to pay tax on it? I'm honestly not sure- I never learnt this in school or anything but I'm guessing the answer is yes?


CASH ISA=tax free
Savings account= standard rate at source- inccome dependant whether you can get he interst tax free, a rebate or pay more tax.
Original post by Trapz99
If I earn £100000 a year before tax and put £10000 of that money into an ISA do I have to pay tax on that £10000? Similarly, if I put £10000 of it in a savings account do I have to pay tax on it? I'm honestly not sure- I never learnt this in school or anything but I'm guessing the answer is yes?


The tax you pay on the £100,000 would depend on how you earned the money. Likely to be paying income tax or even capital gains tax on it.

You can only put money into an ISA after you've paid the applicable tax to it. You pay tax on interest but not on savings. However an ISA will mean the interest is protected from tax.

For example, if you earned £100,000 from employment:

- you receive the first £10,600 tax free
- you pay 20% tax on the amount between £10,601 and £31,785 (i.e. 20% on £24,400)
- you pay 40% tax on the amount over £31,786

You'd also pay 12% national insurance on the first approx. £42,000 and then 2% on everything above that.
Reply 5
Avatar for estel
estel
18
Original post by Zerforax
You pay tax on interest but not on savings.


No more! (Up to the personal savings allowance of £1000 interest per year)
If you put it in an ISA the interest is tax-free. If you put it elsewhere the interest is taxable but you will have a £500 personal allowance (the £1000 mentioned by others is for basic-rate taxpayers. Higher-rate taxpayers get only £500).

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