Interest on 3 year Pensioner bond 16 March 2016 at 6:08PM in Over 50s MoneySaving 4 replies 3K views

bjbyorkshire

I started a 3 year bond when they first became available. The annual interest goes into the bond to be paid out at the end of the 3rd year. Does interest need to be declared on 5 April in each of the 3 years or only on the bonds maturity?

This is the same question if the bonds are in a bank or building society. I have several 4 year bond which I elected to have the interest paid on maturity (I think?).
Thanks

teddysmum

Interest on 'pensioner bonds' is automatically taxed, for this tax year and it's then up to you to reclaim this tax,if you are not eligible to pay.


On other bonds, you pay any tax due, in the tax year when the interest goes into your account, whether you choose to withdraw it annually or at the end of a fixed period. If the interest is only paid to your account once, at the end of the term, then that is when it is taxed or declarable for tax.

bjbyorkshire

Thanks, I will take a closer look at each bond to see if I can tell when the interest has been or is to be paid. I jut usually forget about these bonds until they are due to mature then the accrued interest is a good extra bonus.

macman

If you are referring to the 65+ Bonds, then interest is paid annually on the anniversary date, with 20% basic rate tax already deducted-look in your online NS&I account and you will see the interest added, assuming you have held them for a year.

bjbyorkshire

Thanks, It will make a difference when the tax is paid into a bond, Pensioner or Building society bond . If it is necessary to add all your income streams together, then deduct this figure from the personal allowance, not forgetting the £5000 nil band rate if income is below ??? Then pay the tax due on it. If a 3 or 4 year bond accrues all the interest at maturity, that amount could take a person over the figure for 0 tax to be paid in that year. If the interest is paid out annually, even if it is left in the account, your total income stream in each year will be less.

I'm not sure if any of this makes sense to anyone, least of all me!

Whoever thought that this new system would simplify tax affairs?