SA - declaring interest on NS&I Over 65 bonds

polymaff

xylophone wrote: »

"The amount of taxable pension income is determined by reference to the relevant Chapter of ITEPA 2003 that applies to the pension or annuity in question. In many cases, the taxable pension income for a tax year is the amount accruing in that year irrespective of when any amount is actually paid. Where accruals basis applies, the pension, etc. should be assessed on the amounts that the pensioner is entitled to in the tax year

Pensioners are often content to pay income tax on the amount received in a year, as, in most years the amounts accruing and received are similar. However, it is possible in certain circumstances for the amounts to be different. If a taxpayer requests the statutory basis this should be accepted.

The following table shows how to find the amount of taxable pension income for different categories of pension income.


Type of income
Amount taxable
United Kingdom pensions (see EIM74003) Full amount accruing in the tax year
Foreign pensions See EIM74500
United Kingdom social security pensions Full amount accruing in the tax year (see EIM74600)

For example, if you were paid four weekly in arrears, you could find yourself straddling two tax years.

Half the amount accrued in say 2014-15, but you actually received the money into your account in 2015-16.

Therefore the question becomes do you pay tax on the whole amount received in the tax year 2015-16 or should the amount that "belonged" to 2014-15 be declared and taxed in that year.

As far as I can see from the above, HMRC will do it their way (accrual in the tax year) unless you tell them otherwise?

Many thanks. As long as they'll accept the taxpayer's choice to work on either a cash or accruals basis, I'll get by. Thanks again.