Qaulifying Time Deposit

Manage_my_tax

I have several fixed rate bonds at 50k plus with various banks. Some pay gross and some pay net. note, for many years I have completed a self assessment return.
I have found on the HMRC site that I should on all term bonds that have certain qualifying critia i should be paid gross. (ITA07/S866)
Can I insist that a bank or BS pay me gross when i have asked them they continue to refer to the R85 form. When I tell them they have miss the point and not understood my request they just look blank.

I prefer to manage my tax as I can gain interest on the tax difference for upto two years befor HMRC get their hands on my money.
Barclays, Llyods and Nat West all fully recognise this so why shouldn't some of the others.
Can you elaborate Martin?

John_Pierpoint

I hope you don't mind me attaching the link to "Deposit more than 50K and get taxable interest paid gross" explanation.

http://www.hmrc.gov.uk/manuals/saimmanual/saim9020.htm

http://www.hmrc.gov.uk/manuals/cfmmanual/CFM75060.htm

I doubt more than one person in 50 reading this know that it is possible. When they have read the above links they will be in the state of:
"If you are not pretty confused, you obviously haven't begun to understand the situation".
(The second link is (I think) written on the basis that someone in business would have an accountant who would understand the situation.)

Don't assume that any call centre staff know about this - especially those working for Barclays.

This appears to be an example of a European Directive overriding UK law (like VAT once applied cannot be reduced below 5%).

opinions4u

Halifax and their Guaranteed Reserve account allow you to do what you want.

Can I insist that a bank or BS pay me gross

No. It is up to the product provider to give you this choice. If they prefer not to, that's up to them.

You have the commercial option of taking your business elsewhere.

As for bank staff knowing or understanding this? I beleive the average term deposit balance is around £18,000. For most of the last 3 years savers have been going out of their way to save in chunks of less than £50,000 and bank/building societies have been reducing staff numbers - experience leaves and gets replaced with staff who have a "developing knowledge" let's say .

So don't expect them to know their own procedures on this. Make them go and look it up! (I worked for Halifax for many years, but have no idea whether or not their Fixed Web Saver and Stepped Income Reserve accounts qualify).

harryhound

Latest figures for complaints to the Ombudsman put Lloyds second to Barclays but with Barclays scoring a high level of complaints upheld.

http://www.bbc.co.uk/news/business-11295377

http://www.moneysavingexpert.com/news/banking/2010/09/ombudsman-complaints?utm_source=mainsite&utm_medium=sidebar&utm_campaign=box

Manage_my_tax

Thanks so far , This is the criteria from HMRC it is simple enough!

“Qualifying certificates of deposit and qualifying time deposits

A qualifying time deposit is not a relevant investment. The definition is at ITA07/S866. It is a deposit of more than £50,000 (or the foreign currency equivalent) that matures on a specified date, which must be less than 5 years from the date on which the deposit is made. There must be no right to increase the deposit or to make partial withdrawals, and it must be non-assignable. There is an equivalent provision for transferable certificates of deposit (as defined in ITA07/S865. They are not relevant investments if the principal is more than £50,000 and the instrument has a maturity of less than 5 years”.
Barclays, Llyods and Nat West recognise this and you can find this comment in their terms and conditions, However Santander and Nation Wide make no reference and when asking at a considerable level higher than the help desk (investment bankers with in those companies they are the ones looking blank).

Is it true they can decide whether they can pay gross or net?

I agree I can take my business else where but I do not wish to expose my risk outside of my 50k FSCS government support (soon to become 100k Euro)

John_Pierpoint

Here is a better explanation of some of the wrinkles.

http://www.hmrc.gov.uk/tdsi/mailshot31.htm

Other institutions who think they know the ropes are:

http://www.angloirishbank.co.uk/Personal_Savings/Fixed_Rate_Bond/Qualifying_Time_Deposits/

http://www.bathbuildingsociety.com/qualifyinttimeddeposit-tc.html

http://www.scottishwidows.co.uk/bank/savings/fiveyearfixedtermdeposit_rates.html

http://www.bankofcyprus.co.uk/Documents/COM035.MAR10%20Personal%20Banking%20guide%20October%2009.pdf

Manage_my_tax

<H2 style="MARGIN: auto 0cm">Thanks for the link John_

Options4U need to correct you understanding

Quote:
Can I insist that a bank or BS pay me gross
No. It is up to the product provider to give you this choice. If they prefer not to, that's up to them.

HMRC statement see John_ first link
The terms & conditions of a QTD should make it clear to the investor that the account is a QTD and therefore, interest will be paid without tax taken off. As the account is a QTD interest will not be added to the account balance so we would expect the terms & conditions to explain how the interest will be treated. If the terms & conditions meet the five criteria then interest must be paid gross - neither the saver nor the Financial Institution are able to change this.
The investor should be made aware that the interest forms part of their taxable income and should be reported on any Self Assessment tax return.
</H2>Cant wait to walk into Nation Wide and challenge them.

Manage_my_tax

I have managed to get Santander and ICICI banks to change from net interest to gross according to the HMRC rules on term deposits over 50k.
The Nationwide continue to refuse to adhere to the rules on QTD even though I have sent them the HMRC document.

No one so far at the HMRC can give me a reason as to why they rule that interst is paid gross over 50k anyone know the reason???

John_Pierpoint

It appears to be a EU ruling that overrides our "sovereign" law, like the one that says a VAT rate cannot be reduced below 5% (for those ladies complaining about tampons as a distraction from child benefit)
I expect the wealthy foreigners, who are currently propping up our economy, appreciate the situation?

I am currently having a problem trying to force "a marionette" at HMRC to accept some 20% tax and feel like piggy in the middle between HMRC and the bank.

Mikeyorks

QTDs don't crop up very often - so it's odd to find two concurrent threads?

https://forums.moneysavingexpert.com/discussion/2771390

And you're quite right. If the account meets the (5) qualifying criteria (see post #16 in the other thread) - then it's a QTD whether the financial organisation intended that or not. This from the current guidance on TDSI reporting :

If all of the above conditions (ie the 5 criteria) are met in the terms & conditions the account will be a QTD even if it was not the intention of the Financial Institution to offer QTD accounts

On the reason 'why a QTD on £50k and over'? Purely my opinion ..... but QTDs have been around since at least the early 80's and the threshold was set at £50k at that time. In those days anyone depositing £50k would have been considered a 'high net worth individual'? And I suspect the rationale was that additional tax would be due in any event ...... so may as well pay it gross and save several bites at the same cherry. But no one has indexed the threshold in the intervening 30 years ......... which, perhaps, should now be around £250k?

John_Pierpoint

Perhaps the tellers who are forced to say "can I make an appointment with one of our financial advisers" are managing to identify these "high net worth" individuals ?

"I'm so sorry to hear that you can no longer survive on your state pension and the nest egg you inherited when you sold your mother's house; now that we are paying peanuts on your savings account. Well how about you sign up for this super dooper special bond we offer.
It pays an extra x% and does not take off any tax, just like NSI really !!!!!!"

(............and it will cause total chaos when you come to pay your taxes).

Getting one of these QTD's that pay out monthly just before you are thinking of dying is actually good investment advice:
You wont have any "accrued income" to be taxed at 40% for IHT and then be charged as income in the hands of your beneficiaries where more convoluted calculations will be needed, when they put it on their tax returns and get asked to pay higher rate tax.