ICICI withholding 20% interest - anyone else?

NickyH_3

Hi there,

I activated my ICICI HiSave account on 30/11/05 (which took 2-3 weeks to open, but no worse than I expected) and credited it with £1, followed by £2000 on 09/12/05.

They credited me £5.24 interest on 30/12/05, but also debited £1.05 on the same date, which they've referenced '20% TAX W/H ON INT'. I take this to mean they've withheld 20% of the interest as tax, but I could be wrong. My other accounts never show tax as being deducted and I don't know if this is fair or right.

Has this happened to anyone else? Or can anyone shed any light as to whether it's acceptable? It's a small amount, but I don't want to leave my money with them if they are not paying the full 5.15% interest I signed up for; nor if they are acting disreputably.

Thanks a lot, Nicky (my first post!)

YorkshireBoy

Have you registered as a non-tax payer with them by completing the appropriate form?

HGLTsuperstar

Your other accounts dont show it, as they pay the interest net straight off (unless you do a R85 form). For some reason ICICI pay you gross then claim the excess back, so what they are doing is perfectly legal. If you are a non-tax payer tell them, else you get net interest which is obviously less than 5.15%

NickyH_3

Urm ... no. Probably really naive of me, but I didn't realise I needed to (I usually am a tax payer but this year am a student on a post-grad course); is it available on their website? My course only lasts till September this year, so from then should I expect them to take this percentage? Is this something Lloyds etc do all the time anyway, but in a less/opaque less confusing way (i.e. do they just take the tax off the interest before they credit it to you?). I am really confused. I didn't realise the banks taxed interest in this way (I guess I thought you had to have more in credit). Sorry, probably being SO stupid!

Thanks for your response!

NickyH_3

Just seen HGLTsuperstar's reply, which has answered all my questions just as I was typing them. Thank you, both!

I may still get the form for the next 9 months, but maybe it's not worth it.

THANKS again!

innovate

Cahoot and ING do it the same way as ICICI does. I think it's super that they detail what they paid and what they withheld.

Stonk

Indeed. Very useful for those unfortunate enough to have to fill in tax returns ;o)

dunstonh

Is this something Lloyds etc do all the time anyway, but in a less/opaque less confusing way (i.e. do they just take the tax off the interest before they credit it to you?). I am really confused. I didn't realise the banks taxed interest in this way (I guess I thought you had to have more in credit). Sorry, probably being SO stupid!

On my LTSB statements, Lloyds show it as net credit interest when tax is deducted but have the gross amount and tax deducted showing on the entry as well.

isasmurf

NickyH wrote:

I may still get the form for the next 9 months, but maybe it's not worth it.

If you expect to earn more then your personal allowance in 2006/07 then you cannot register to receive interest without tax deducted after 5th April.

It's the law that every bank has to deduct tax at the basic savings rate (currently 20%) from your interest. It is also law that they must tell you how much tax they have deducted from your interest at least once per year. Some will just give you a tax statement at the end of the year, and some will tell you each time they pay you interest.

Deemy

NickyH wrote:

Hi there,

I activated my ICICI HiSave account on 30/11/05 (which took 2-3 weeks to open, but no worse than I expected) and credited it with £1, followed by £2000 on 09/12/05.

They credited me £5.24 interest on 30/12/05, but also debited £1.05 on the same date, which they've referenced '20% TAX W/H ON INT'. I take this to mean they've withheld 20% of the interest as tax, but I could be wrong. My other accounts never show tax as being deducted and I don't know if this is fair or right.

Has this happened to anyone else? Or can anyone shed any light as to whether it's acceptable? It's a small amount, but I don't want to leave my money with them if they are not paying the full 5.15% interest I signed up for; nor if they are acting disreputably.

Thanks a lot, Nicky (my first post!)

Don't worry , its normal

Most banks just show the net interested credited.

Yours is showing gross interest, and then the 20% deduction for tax.

As others mention. if your a NON tax payer, i.e total gross earnings are less than your Tax free allowance then fill in a form R85 to get your interest credited gross

suffering_sould

:mad: Frustrated

THIS IS THE HEIGHTS OF NONSENSE. THESE INDIAN BANKS COME TO UK AND DECIDE TO DO BUSINESS WITH THEIR STYLE. I WAS KEPT ON HOLD FOR 30 MINS ASKED COUPLE OF QUESTIONS TO CALL CENTRE THEY CUT ME OFF. THEIR INTERNET SITE IS !!!!ING ANCIENT AND TRUST ME PEOPLE WORKING THEIR NEED DICTIONARY IN ORDER TO SPEAK ENGLISH HALF OF THEM DONOT SPEAK ENGLISH THEY TALK TO YOU IN THEIR OWN LANGUAGE. GOSH WHAT A WASTE OF MY TIME.
I WONDER WHO ELSE HAS GONE THROUGH WITH THIS HEADACHE.