halifax guaranteed reserve-interest annually or end of term?

helzbelz_57

does anyone know whether the interest on this account is paid annually or at the end of the term, i cant find anything on the website to say either way.

thanks

rb10

You can choose whether to have it paid:

(i) Monthly to another account
(ii) Annually to another account
(iii) On maturity (i.e. at the end of the term). If you choose this option, it will be compounded annually, but kept in the account.

helzbelz_57

thanks for that, could you help me work out what that means for my account then.

i have taken the two year term and deposited £8912.00 at 3.55%. does this mean that at the end of the 2 years, after tax, i will be paid £253.10?

rb10

Gross interest earnt in the first year: 8912 * 0.0355 = 316.38
So the total balance then is 8912 + 316.38 = 9228.38
Gross interest earnt in the second year: 9228.38 * 0.0355 = 327.61

Total gross interest to be credited on maturity 316.38+327.61 = 643.99
Less tax at 20% gives £515.19 at the end of the term.

rb10

opinions4u wrote: »

£8,912 x 2.84% = £253.10 for 1 year.

£8,912 + £253 = £9,163 x 2.84% = £260.23 for the 2nd year.

So I make it you'd get £513.33.

That's interesting the way that you have worked it out - I'm just guessing with my way and don't know that it's correct, but as interest is only added at the end of the term I was guessing that the tax is only taken then, and that the compounded amount is based on the gross rate(???)

helzbelz_57

ahh!! i see now.

ok, if i was to put this in a guaranteed reserve for my son (he is 4) i am assuming it would be tax free automatically?

rb10

helzbelz_57 wrote: »

ok, if i was to put this in a guaranteed reserve for my son (he is 4) i am assuming it would be tax free automatically?

Make sure they register it for gross interest when you open it, you'll then be able to get the gross interest.

helzbelz_57

ok, we did this for him last year for a one year term and i think he paid tax on his interest. is there anyway of finding out and getting it back?

rb10

Yes, if the account is still open, and the interest was paid since 6th April 2010, then just register it for gross interest and it will be paid into the account in a few weeks time.

Otherwise, complete an R40 form from HMRC. (Here)

opinions4u

rb10 wrote: »

That's interesting the way that you have worked it out - I'm just guessing with my way and don't know that it's correct, but as interest is only added at the end of the term I was guessing that the tax is only taken then, and that the compounded amount is based on the gross rate(???)

I have a sneaky suspicion your way is actually right.

If they capitalised the interest at 12 months, I'd be correct, but they don't, so your way makes more sense.

They should let you build an illustration on the web site then we could settle it once and for all!!!

(will delete my previous post)

helzbelz_57

no, it expired in march so i will have to fill in the form. thank you all for this