Income tax on fixed rate bonds

muffindust

If you have a fixed rate bond that pays the interest on maturity, do you have to declare that interest on receipt, in the tax year of maturity? I would not like to inadvertently load a lot of income into one tax year. Thanks

Muffin

glider3560

The income tax liability arises in the tax year that the interest is paid. So if you opened a 5 year bond today that pays interest only at the end of the 5 years, you would declare it in the 2015/2016 tax year.

This is something to watch out for if it will take you over a threshold or if you are worried about the rate of income tax changing. Best thing if you are worried is to opt for interest added every year.

Stompa

muffindust wrote: »

If you have a fixed rate bond that pays the interest on maturity, do you have to declare that interest on receipt, in the tax year of maturity?

Yes.

http://www.hmrc.gov.uk/tdsi/key-info.htm#f

muffindust

Thanks for the replies, that is what I thought. Also thanks for the link I did spend a little time on the HMRC site but obviously wasn't looking in the right place.

Muffin