When is NS&I 3yr Bond Interest taxable?

Dazed_and_confused

According to gov.uk you don't have to do anything as HMRC will get the info from the banks.

But there are disadvantages for some with this approach in that you have to pay the tax in a condensed period.

So say you do nothing and HMRC catch up now with last year, 2016:17. They will want you to pay the tax for 2016:17 over the 12 months from 6 April 2018 to 5 April 2019. And they will estimate the tax you owe for this year (2017:18) and collect a bit over the next 4 months but the rest will be collected over the 12 months from 6 April 2018 to 5 April 2019.

And they will collect the tax due for 2018:19 over the 12 months from 6 April 2018 to 5 April 2019.

So you are essentially paying three years worth of tax over 12and a bit months.

Fine for some not so good for others who might prefer to keep things more up to date and spread it out over a more natural time frame

Terry98

Thanks for the reply.

So quite a few standard rate tax payers will have to get used to paying some of their tax in arrears when interest rates get back to 'normal' levels? I suppose that is the payback for the new savings allowance.

Dazed_and_confused

I guess so but you always have the option of keeping HMRC informed of your interest and educated guesstimate for the current/forthcoming year in which case you could pay pretty much year by year.

RG2015

IanManc wrote: »

No, you receive the interest when it is added to your account - that is on each anniversary date, not at the end of three years.

Thank you for your reply and it is now clear that I have misunderstood the terms being used.

The bond matures after three years so I am paid the principal (£3,000) and the interest (£202.38) after three years.

I now understand that receiving interest and being paid interest are two different things.

caveman38

Dazed_and_confused wrote: »

According to gov.uk you don't have to do anything as HMRC will get the info from the banks.

But there are disadvantages for some with this approach in that you have to pay the tax in a condensed period.

So say you do nothing and HMRC catch up now with last year, 2016:17. They will want you to pay the tax for 2016:17 over the 12 months from 6 April 2018 to 5 April 2019. And they will estimate the tax you owe for this year (2017:18) and collect a bit over the next 4 months but the rest will be collected over the 12 months from 6 April 2018 to 5 April 2019.

And they will collect the tax due for 2018:19 over the 12 months from 6 April 2018 to 5 April 2019.

So you are essentially paying three years worth of tax over 12and a bit months.

Fine for some not so good for others who might prefer to keep things more up to date and spread it out over a more natural time frame

I'm a bit confused myself. Surely there is no worries about tax due for 16/17 tax year as tax was stopped at source. The new rules only started from April 17?

Dazed_and_confused

You must have had a special exemption because tax stopped being deducted from (virtually) all accounts from 6 April 2016.

caveman38

Dazed_and_confused wrote: »

You must have had a special exemption because tax stopped being deducted from (virtually) all accounts from 6 April 2016.

Oops, better check then.

Terry98

Dazed_and_confused wrote: »

I guess so but you always have the option of keeping HMRC informed of your interest and educated guesstimate for the current/forthcoming year in which case you could pay pretty much year by year.

I am not so sure. I use MS Money and keep it up to date on a monthly basis and I would still have problems trying to forecast interest payments that are paid on a annual basis.I am not looking a gift horse in the mouth but I think quite a few people on tight budgets will be upset when their tax code gets reduced year on year.

Now how much did they say that getting rid of car tax discs would save the country?

RG2015

Terry98 wrote: »

I am not so sure. I use MS Money and keep it up to date on a monthly basis and I would still have problems trying to forecast interest payments that are paid on a annual basis.I am not looking a gift horse in the mouth but I think quite a few people on tight budgets will be upset when their tax code gets reduced year on year.

Perhaps, but there are not that many on tight budgets who would breach their PSA limit.

I have an Excel spreadsheet with 12 columns for the months April to March plus an extra column for 1st to 5th April. My longest saver is 3 years so I have 4 tabs on the spreadsheet taking me to 5th April 2021.

Terry98

RG2015 wrote: »

Perhaps, but there are not that many on tight budgets who would breach their PSA limit.

You are most probably right.

Anybody exceeding the PSA limit should have sheltered it in an cash ISA