income tax on interest

slopemaster

I'm cudgelling my brains here - can someone help me out please?

Say if I had enough money in savings to get just under £6000pa in interest, and I had no other income, then I could get the interest paid gross, yes?

Now say I put the money in a 3-year term account where the interest is not added until the end of the term (I think thats how they work???)
So I would get say £20 000 in interest all in one tax year, and pay tax on
£14 000 of it - having effectively wasted my tax allowance in the other 2 years.

Is that how it works?

My actual situations a bit more complex, but hopefully someone can explain the principle to me - as Kaupthing Edge are offering 7.67% on a 3-yr term a/c!!!!!!

Lokolo

Yep thats correct I think! Lame yes.

PasturesNew

Yes.
.......

But how can you have no income? What are you living on?
You must be in prison.

slopemaster

Not prison, just getting a student bursary - which doesnt count.

Paul_Herring

slopemaster wrote: »

I'm cudgelling my brains here - can someone help me out please?

Say if I had enough money in savings to get just under £6000pa in interest, and I had no other income, then I could get the interest paid gross, yes?

Yup.

Now say I put the money in a 3-year term account where the interest is not added until the end of the term (I think thats how they work???)
So I would get say £20 000 in interest all in one tax year, and pay tax on
£14 000 of it - having effectively wasted my tax allowance in the other 2 years.

Yup. You may want to consider putting some in 1 and/or 2 year accounts and roll them over when they mature.