NSandI Investment Bond

weezie7

Does anyyone know on the above, what the two payments are, for tax purpose? I receive a monthly payment, in two amounts - 1 "Interest capitalisation" and "Interest adjustment". I am not a tax payer....... can anyone help please?

I need to do an R40 to claim tax back, and need to know if this needs to be included!

Many thanks

xylophone

Can you say exactly what this investment bond is? What is the name of the product?

Are you sure that tax has been deducted?

weezie7

Apologies, it is an Income Bond. The interest is paid gross.

polymaff

weezie7 wrote: »

Does anyyone know on the above, what the two payments are, for tax purpose? I receive a monthly payment, in two amounts - 1 "Interest capitalisation" and "Interest adjustment". I am not a tax payer....... can anyone help please?

I need to do an R40 to claim tax back, and need to know if this needs to be included!

Many thanks

Look at the Your Income Bonds Statement you received which covered the end of the tax year. Look for the heading "Tax Information for the 2015/16 tax year". That section should contain a sentence "The gross interest paid (without tax deducted) in the tax year ending 5 April 2016 is £x.xx"

Use the £x.xx when completing the R40.

weezie7

Thanks polymaff but what do the two terms mean? What is capitalisation and adjustment???

polymaff

weezie7 wrote: »

Thanks polymaff but what do the two terms mean? What is capitalisation and adjustment???

NS&I have bizarre ways of managing the Income Bonds. I don't think that anyone understands their methodology - and that includes them. In particular there appears to be a closed period each month when, if some transaction happens they need to retrospectively recalculate. This not only produces the interest adjustments you mention, but it also affects payouts. A couple of years ago I asked them to pay £20,000 to my account with another bank. What got paid was just less than £20,000 and so I had to pop across the road to a third bank to grab a few extra pounds to get the total in the receiving bank up to £20,000 in order to open a savings account that had an interest break at £20,000+.

To quote the late Terry-Thomas: "What a shower!"

p.s. "capitalisation" is just their curious substitute for the word "credited"

xylophone

just their curious substitute for the word "credited"

Why "just their"?

This term comes up often in details of bank and building society accounts.

http://www.skipton.co.uk/savings/savings-hub/jargon-buster

Examples

http://www.bathbuildingsociety.co.uk/savings/personal-savings-and-investments/lifestyle-instant-account

""Interest is calculated daily and capitalised annually on 31st December. -

http://www.saverscene.com/savings/16950-1-year-fixed-rate-savings-highest-interest-rate-3-6%25-yorkshire-bs-clydesdale-bank.html

"Interest capitalised and paid annually, or on term maturity"

That said, it is a curious term for NS&I to use in connection with this product because as I understand it, there is no option to add the interest to the income bond capital - it has to be paid out monthly.

http://www.nsandi.com/files/published_files/asset/pdf/income-bonds-brochure.pdf

xylophone

Apologies, it is an Income Bond. The interest is paid gross.

Then clearly there is no tax to reclaim on interest received on this product.

However, if you are completing an R40 because you need to reclaim overpaid interest on other bank/building society/ NS&I products which have had interest deducted at source, you must include details of what you have received gross - see box 3.4


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/419506/R40_M__internet_v2.0.pdf

and notes on p3 and 4 here https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/419507/R40_Notes__2015_internet_v2.0.pdf

The figure in respect of the income bonds is the total interest received in the tax year as given on your annual statement, (see polymaff) and see NS&I booklet ( link above).

polymaff

xylophone wrote: »

Why "just their"?

Correct use of English, xylophone. See COD just adv. case 4.

Spot on for noting the bigger issue, though. I totally missed it

xylophone

correct use of English, xylophone. See COD just adv. case 4.

Ah, you meant "simply" rather than that only NS&I use the term....

polymaff

xylophone wrote: »

Ah, you meant "simply" rather than that only NS&I use the term....

"merely" would be my alternative.