New Fixed Term Deposit Accounts from Yorkshire Bank

alanq

Either you were misinformed or misunderstood. Interest paid on maturity may be EQUIVALENT TO what you would have got had the interest been paid annually but for tax purposes that is an entirely different matter.

Either the interest and tax are paid at maturity or interest and tax are paid annually. This is particularly important to higher rate tax payers who with annual interest will have to pay additional tax each year while the interest is still in the account.

Also low tax payers receiving interest each year may be entitled to reclaim the tax each year.

Ifts

After speaking to Yorkshire Bank, they are saying that if I have more than 50K in any of their Term Deposit Accounts, they will be classed as Qualifying Time Deposits (interest paid gross).
Unless I go for the 24, 36 & 60 month Term Deposits – Interest Capitalised Annually option, where the 'interest is capitalised annually and repaid at maturity' then interest will be paid net of basic rate tax.

If you go to:
http://www.ybonline.co.uk/personal/savings/fixed-term-and-notice-accounts/term-deposit/term-deposit-personal-savings#tab5Content
and select 'summary box' you will see there is a difference in the T&C's -

Account Name 24, 36 & 60 month Term Deposits – Interest Capitalised Annually
Tax Status - Interest will be paid net of basic rate tax unless you have registered for payment of gross interest as a non taxpayer, or are resident abroad and have signed a non-resident’s declaration.

On all the other versions of this fixed term deposit account, over 50K balance is classed as a Qualifying Time deposit:

Tax Status - If your deposit is a Qualifying Time Deposit (as defined in the account Terms and Conditions) interest will be paid gross. On all other deposits interest will be paid net of basic rate tax unless you are entitled to register for gross interest and have completed the relevant documentation.

I chose to go with the 36 month 'interest is capitalised annually and repaid at maturity', so I hope they have got it right when they are telling me that it will not be classed as a Qualifying Time Deposit?

atypical

RetiredInThailand wrote: »

Just make a new Gmail address. Takes seconds, and you can redirect all incoming mail to your own address.

With Gmail addresses you can add fullstops wherever you like. For example all the below are the same:
forenamesurname@gmail.com
forename.surname@gmail.com
fore.name.sur.name@gmail.com

But when you register for accounts they look like different email addresses. You can even filter your mail based on which address it was sent to. A simpler solution than creating a new account!

Ifts

alanq wrote: »

Either you were misinformed or misunderstood.

From the couple of times Ive spoken to Yorkshire Bank today Id say he was more probably misinformed.

1st time I phoned up today to check if I took out the 24, 36 & 60 month Term Deposits – Interest Capitalised Annually option , would the interest be paid net of basic rate tax or will it be classed as a Qualifying Time Deposit if I deposited over 50K? Was told 'it would be classed as a QTD and any interest paid gross'.
When I told the call handler that it said differently in the T&C's on the summary page for this product (interest will be paid net of basic rate tax), she went away to check, came back and said 'there was a mistake on the online summary page and she was going to get it rectified and any balance over 50K will be classed as a QTD'.

I was not sure so I called a 2nd time to confirm, this time got put through to the term deposit dept, where I was told that the '24, 36 & 60 month Term Deposits – Interest Capitalised Annually option is not classed as a QTD and any interest will be paid net of basic rate tax'. When I said previously I was told otherwise by her colleague, and her colleague had said they were going to amend the T&C's to reflect this. She said 'it did not qualify as a QTD because something to do with the Interest being Capitalised Annually, and I would get any interest paid net of basic rate tax even if the balance is above £50K'.

I have emailed them to say I got conflicting stories when I phoned them up and asked for clarification on this, I'm waiting for a reply back from them.

alanq

"A QTD is a deposit of at least £50,000 ... which

• requires repayment at a specified time within 5 years of the QTD being made. Repayment on the fifth anniversary does not satisfy this requirement. However if a QTD matures on a non working day it is acceptable to repay it on the next working day. It is also acceptable if it is paid out on the last working day prior to maturity,
• makes no provision for the right to repayment to be transferred, and
• prevents partial withdrawals of, or additions to, the deposit."

http://www.hmrc.gov.uk/tdsi/tdsi-guidance-for-dt-2.htm#212

For accounts opened after 6th April 2012 income tax payers will have to have interest paid net for such accounts which should simplify matters.
http://www.hmrc.gov.uk/tdsi/mailshot38.htm

Ifts

Thanks for the link. I read up on the hmrc site about QTD's during the day when I was trying to get a definite answer from Yorkshire Bank.

Still don't understand why Yorkshire Bank say they are all QTD if you deposit more than £50K, but not the one I have listed.
Hopefully they are right and it is not a QTD, id prefer it if it was not the case for the 36 month fixed term deposit (Interest Capitalised Annually) to be honest.

I am waiting for them to confirm this by email before I post the application to them.

alanq

Could you not apply for more than one bond of less than £50K each? You would then be sure that they were not QTDs.

Ifts

alanq wrote: »

Could you not apply for more than one bond of less than £50K each? You would then be sure that they were not QTDs.

Tried doing that, but came up against the hurdle of only being able to apply for one bond under my email address (only got the one email address, although not difficult to get another email address but hoping it wont come to that).
Yorkshire Bank were aware of the design fault on their website where customers required more than one bond, but were unable to do so online under the same email address (have not got a branch near me). They said they are trying to rectify that too so customers can open more than one bond under the same email address.

See what Yorkshire Bank say when they reply to my email, failing that will have to go for under £50k (had same issue with Rothschild Reserve re QTD's but with them you were not allowed more than one of each issue of their fixed term deposits).

RetiredInThailand

Ifts wrote: »

Tried doing that, but came up against the hurdle of only being able to apply for one bond under my email address (only got the one email address, although not difficult to get another email address but hoping it wont come to that).

This seems an extremely minor inconvenience and certainly not a hurdle. You could have created several free email addresses in the time it has taken you to discuss it in this thread and as I said you can easily forward all messages from a free account to your regular account.

If you already use Gmail you can even use the "." trick to create different versions of your existing address, as mentioned.

Ifts

RetiredInThailand wrote: »

This seems an extremely minor inconvenience and certainly not a hurdle.

True….. I am aware that it’s easy to set up another email address, but as mentioned, I rather not have another email address if I can help it, thanks.

As for the time it’s taken me to discuss it, I was browsing the MSE forum anyway on & off today as usual when I’ve been online.
It was less about discussing it, more for the point of alerting others to the QTD bit if they were going to deposit more than £50k in a fixed term deposit with the Yorkshire Bank.
Didn't want others to find out at the last minute if they wanted to put more than £50k in one of these fixed term accounts that it will be a QTD.

I myself am waiting for them to get back to me, if they can confirm what they told me in the 2nd phone call (that the fixed term account I’ve chosen to go for does not qualify as a QTD) via email than happy days. If not hopefully they will have fixed the bit about customers not being able to have more than one bond per email address, that way I can have more than one bond with my original email address. If all else fails I will just deposit less than £50K with them. I am sure other offers will come along soon.

Roll on 6th April 2012!

Edit: Having re-read the information in this link: http://www.hmrc.gov.uk/tdsi/tdsi-guidance-for-dt-2.htm#212

As confusing as it was for me, I think I am now aware of why Yorkshire Bank were telling me that the fixed term deposit account that I have chosen does not qualify as a QTD.

2.12 Qualifying time deposits

Where any of the conditions cease to be met the QTD is broken and is no longer a QTD. Examples of a QTD being broken include

• additions to the deposit (including capitalised interest),
• withdrawal of part of the deposit before it matures, and
• pooling the deposit with other deposits.

As I've chosen to go for the - 24, 36 & 60 month Term Deposits – Interest Capitalised Annually option