Tax on 3 year savings bonds

bjbyorkshire

Hi, I have a 3 year Building Society savings bond due to mature in October 2017. The interest has rolled automatically into the Bond year on year.

I have not declared this on my tax returns for the past 2 years as I was not able to access this interest until the bond matures.

The tax due on this bond will not have been paid year on year but will all need to go on my next tax return. I think this may well mean that I have income over the limit for passing on the married couples allowance to my oh, He has had this for the last 2 years.

How confusing is all this, or is it just me not understanding 3 year bonds???

Can any one make it clearer to me?

Thanks

le_loup

If the interest was paid - even thought into the bond account - then tax is due on that interest - even though you cannot or chose not to access the interest each year.

bjbyorkshire

so.... what do I do now as I haven't added this interest to my annual amount for the last tax year??? I have paid the tax I thought I owed by end of Jan, do I need to declare it now????

Thanks

FOREVER21

Tax on interest ( if due) is payable in the tax year when the interest is paid , whether you can access the interest is immaterial, in the view of HMRC

I was in the reverse position in the 2015/16 tax year when my NS & I bond had interest added and tax taken off even though I could not access the interest.

You have 3 choices now,

Go on line and amend your SA account

Write to HMRC and explain the position.

Do nothing and see if HMRC contact you with tax demand.

For me option 3 is a no go as if they eventually spot the error and come after you for the back tax they may just get suspicious and cause all manner of hassle.

bjbyorkshire

Thanks for that. It does actually also apply with my NS&I 3 year bond so I had better do a tot up and amend the tax return. I do pay an accountant to do the final tax forms but of course he can only put down the figures that I give him. Oh dear, what a pain but I agree... best to do it now rather than further down the line if it is found out.

Thanks for the clarification.