Nationwide bank, putting daughters repayment into an account that is taxable

[ronecc]

In 2019, we paid for a car for our daughter. It was not a loan, it was just because she needed a can and did not have the money to pay for one. She pays us back when she is able to.
The money is payed into our Current account and my wife then pays it into our savings account. Nationwide have decided that money is taxable. It is not an income it is just repaying what we payed out for her car. Is this right that we will now pay tax on it? Should it maybe be left in the current account?

[PallasAthena]

What do they think is taxable, the interest Nationwide pay on the money in your Savings account?

[ronecc]

What do they think is taxable, the interest Nationwide pay on the money in your Savings account?

I think my wife has made a cock up. If she puts money in a savings account it is surely liable for tax. She was confusing me and I was confusing you all. If we took the money out of our savings to buy our daughters car, it could have contained an element of interest, so when we put it back in, it is again going to earn interest, which is taxable. Sorry for the mistake.

[PallasAthena]

I was confused too!

In general if you have money in a bank account that pays interest then the interest paid to you is taxable (unless the account is an ISA). The source of the money in the account is irrelevant.

Bear in mind that you can earn a certain amount of interest tax free before you start paying tax on it. I can't remember the amounts, they'll be on HMRC website.

[ronecc]

I was confused too!

In general if you have money in a bank account that pays interest then the interest paid to you is taxable (unless the account is an ISA). The source of the money in the account is irrelevant.

Bear in mind that you can earn a certain amount of interest tax free before you start paying tax on it. I can't remember the amounts, they'll be on HMRC website.

Thanks, I have just been looking into it. Of course you are correct, money in a savings account is taxable. The first £5000 of interest is not taxable, depending on your income. The more you earn above the Personal Allowance, reduces the tax free amount you can save