Paying tax on a 1 year bond

chrisks

I took out a 1 year bond with BLME last year.  It has just matured and the statement that I received said that tax had not been deducted.  Is it up to me to pay any tax on this and if so how do I do it?

ColdIron

Banks no longer withhold income tax for you, it is your responsibility. You may not have to pay any tax as there are a number of 'allowances' that may cover it but it depends upon other factors such as how much interest you earned and your other income. E.g. are you employed or receiving a pension and if so how much? What rate of tax do you pay? How much interest was it? Do you have other interest or dividends? etc

Albermarle

Tax has not been deducted from interest payments since April 2016 . Is this the first interest you have received in that time?

chrisks

Albermarle said:

Tax has not been deducted from interest payments since April 2016 . Is this the first interest you have received in that time?

I only took out the bond in 2019.  Is the interest classified as income tax? 

chrisks

ColdIron said:

Banks no longer withhold income tax for you, it is your responsibility. You may not have to pay any tax as there are a number of 'allowances' that may cover it but it depends upon other factors such as how much interest you earned and your other income. E.g. are you employed or receiving a pension and if so how much? What rate of tax do you pay? How much interest was it? Do you have other interest or dividends? etc

Do you have a link to these allowances please?

[Deleted User]

Hi,

a quick google comes up with this from Gov.uk.

bargainhunter888

i thought that HMRC will deduct from your tax code? i cant imagine people submitting tax for a few pounds etc if it came to it or something insignificant

jimbow25

bargainhunter888 said:

i thought that HMRC will deduct from your tax code? i cant imagine people submitting tax for a few pounds etc if it came to it or something insignificant

HMRC will not be interested because UK residents, at least, are allowed to receive £1,000 interest income if they are a basic rate tax payer or £500 if they are a higher rate tax payer, over and above any that can be covered by the £12,500 personal allowance. Therefore only people that earn over £150k a year, or receive more interest than the above, need to be paying tax on anything.

chrisks

I had a look at frugalmacdugal's link and the bank informs HMRC of any interest that you have been paid.  They then take it from there.

Tildaplum

They do not take it from there - it is your responsibility to check whether you need to submit a tax return and pay the tax on the interest you have earned.

This will depend on several factors including how much other interest you have earned in the tax year and how much you have have earned via other methods eg  income from working amongst other things

macman

If it matured after 5/4/20 then it falls into your tax return for 20/21, not 19/20.