Personal Savings Allowance guide

Kass_Evans

But if it is a three year bond I am not free to draw on it:

Interest ‘arises’ when it is received or made available to the recipient. Interest has been made available if it is credited to an account on which the account holder is free to draw.

xylophone

It is immaterial whether you can access the interest - if added to the account within the tax year it is taxable within that tax year.

See http://www.nsandi.com/files/published_files/asset/pdf/65-guaranteed-growth-bonds-key-features-leaflet.pdf

Kass_Evans

Thanks for your reply but I am not talking about an NS and I Growth Bond. I am talking about Fixed Rate Bonds in general.

coyrls

Kass_Evans wrote: »

I have a three year fixed rate bond taken out in June 2014. The interest I received in 2015 had 20% tax deducted

You've answered your own question, the interest you received in 2015 wouldn't have had tax deducted from it unless tax was due on that interest payment. All that is changed is that interest will now be paid gross, any tax on interest is still due in the tax year that it is credited to your account.

masonic

Kass_Evans wrote: »

But if it is a three year bond I am not free to draw on it:

Interest ‘arises’ when it is received or made available to the recipient. Interest has been made available if it is credited to an account on which the account holder is free to draw.

You seem to have ignored bigfreddiel's post, which was spot on. At the end of the day, you can try to reinterpret that quote in whatever way you like. Your bank will report the interest to HMRC and will likely tell you at the end of the tax year how much interest they believe you have received. If you choose not to declare it, then be prepared to face the consequences.

Kass_Evans

Thanks to you all for your help. I will declare my interest in the year that it is credited to my account.

Kass_Evans

Hi all

So I have to declare my interest each year when it is credited to my account but where am I supposed to get the money from to pay the 20% tax if the money is still with the bond and I am unable to withdraw it.

le_loup

You have already paid the tax. The interest will have been paid net!
Unless you put in an R85 because you are not a taxpayer ... in which case ........

Kass_Evans

But I will not have paid the tax as interest is being paid gross from 6 April 2016. So again my question is where am I supposed to get the money to pay the tax bill if I can't access the account.

xylophone

So I have to declare my interest each year when it is credited to my account but where am I supposed to get the money from to pay the 20% tax if the money is still with the bond and I am unable to withdraw it.

For the current year, the interest will already have been deducted.

If you have additional tax to pay because you are a 40% plus tax payer for example, presumably you have the income to cover it.

In future years, the interest will be paid gross - if you have tax to pay over and above your savings allowance, again, this would indicate that you have the income to cover it.