ISA Savings for future income?

[Lorraine_5040934]

I do not have a pension so I have been saving in ISA's and the interest is added each year and grows tax free.

If I draw the interest off in the future to use as income but still leave the capital there is the interest that I receive then taxable once it has gone into my bank account? Once the interest is out of the ISA wrapper is it taxable as income or is the interest still tax free as it was originally "earned" inside the ISA on a lump sum? All the leaflets in the banks and building societies encourage tax free savings but don't explain clearly what happens if you draw the interest off?

 

[MartinJ]

Lorraine,

The interest you draw out is tax free as it has been growing within the ISA wrapper.

If you draw any money out of the ISA and leave it in an interest bearing account then any interest earned on this account will be taxable as it is outside the ISA wrapper.

If you want to save tax dont draw the interest out of the ISA unless you intend to spend it.

Hope that makes sense.

Martin