tax on interest

lkmc01

:eek:

the n s and i's guaranteed growth bond, is it a savings account or an investment?

I am very confused about the tax on interest in this account.

I don't pay tax, but I think for this account I will have to - strange :eek:

I have rung them up and they say that for this account I have to pay tax and then claim it back.

Has anyone else done this?

Or has anyone registered for gross interest before their guaranteed growth bond closed?

If it is correct that I must be first charged tax and then claim it back, how do I claim it back and how long does it take?

Also why do I have to pay it in the first place.

masonic

lkmc01 wrote: »

If it is correct that I must be first charged tax and then claim it back, how do I claim it back and how long does it take?

It seems strange that they cannot register the account for gross interest, but if that really is the case then it is relatively straight forward to claim it back. This page links to the relevant form you need to fill out and send to HMRC. You just need to fill out details of all your income/interest and the tax deducted and they will calculate how much tax you've overpaid and refund it. You need to do this after the end of each tax year you want to claim for and from previous experience it usually takes a couple of months for them to process the claim.

Mikeyorks

Their systems are fairly basic .... and quite a lot of their products are paid gross .. can't think of one where they offer to accept R85s? You happen to have chosen one where they pay net ... and there appears no alternative to the 20% initial deduction at source. Covered under the terms of the product :-

The interest from your Guaranteed Growth Bond is taxable and the tax is deducted at source (known as ‘paid net’). This means that we take off tax (20% at time of printing) before we credit your interest.
If your total taxable income, including the interest on your Guaranteed Growth Bond, means that you pay tax at the basic rate you will have no more tax to pay on the interest. If you pay tax at the higher rate you must declare the interest to HM Revenue & Customs.
Each tax year we will send you a statement showing the interest earned on your Bond and the amount of tax taken off. Non-taxpayers and starting rate taxpayers can claim the excess back from HM Revenue & Customs.
For joint investments where one investor is a non-taxpayer, their share of the tax can be claimed back. Claims should be made to HM Revenue & Customs.
We cannot advise you on how much tax you will need to pay. To find out more, visit the HM Revenue & Customs website at www.hmrc.gov.uk
Because tax is deducted at source for all investors in Guaranteed Growth Bonds, one of our investments that pays interest gross may be more suitable for non-taxpayers. And if you are a higher rate taxpayer, one of our tax-free investments may suit you better.

.... it's taxed under Income Tax (not an 'investment' that comes under CGT) so you will need to reclaim after the 5th April in the financial year when the interest is paid / tax deducted.