The Top Fixed Interest Savings Discussion Area

Band7

wmb194 said:

Patr100 said:

Steve_xx said:

newuser2011 said:

Hello all, am I right in thinking of all interest is paid at the end of a 2 year fixed term, that interest counts only towards the tax free allowance for that single tax year (and I can’t split and spread over two years as the interest was earned over two years)? Thank you!

The tax is liable in the tax year in which you received payment of interest into the account.

If you can't access it, you don't pay tax on it in that year.

 Interest becomes taxable at the point it’s made available to you to withdraw. For most fixed rate bonds, although interest may be earned and credited to your balance annually, interest is actually paid out at maturity so the interest earned will fall to be taxed in the tax year in which the product matures

https://www.willisowen.co.uk/deposit/tax-on-your-savings

But it depends on whether the bond gave you the option to have the interest paid away during its term. If the option was given to you but you chose to have it accrue in the account then the income still arises in the year in which it was credited to the account.

It would help if people actually mentioned the bonds they're looking at. If it's the new Nationwide (NW) online bonds where, for some reason, NW has now decided that interest cannot be paid out during the term then in theory, yes, all taxed in the final year. However, posters have reported that they asked NW about this and NW says that it will report the interest to HMRC annually. Someone at NW really hasn't thought this through...

*The statement from Willsowen is incorrect - "most" fixed rate bonds will give you the option to have interest paid away every year, in fact in my experience most insist on it.

Most insist on having the interest paid away? 

wmb194

Band7 said:

wmb194 said:

Patr100 said:

Steve_xx said:

newuser2011 said:

Hello all, am I right in thinking of all interest is paid at the end of a 2 year fixed term, that interest counts only towards the tax free allowance for that single tax year (and I can’t split and spread over two years as the interest was earned over two years)? Thank you!

The tax is liable in the tax year in which you received payment of interest into the account.

If you can't access it, you don't pay tax on it in that year.

 Interest becomes taxable at the point it’s made available to you to withdraw. For most fixed rate bonds, although interest may be earned and credited to your balance annually, interest is actually paid out at maturity so the interest earned will fall to be taxed in the tax year in which the product matures

https://www.willisowen.co.uk/deposit/tax-on-your-savings

But it depends on whether the bond gave you the option to have the interest paid away during its term. If the option was given to you but you chose to have it accrue in the account then the income still arises in the year in which it was credited to the account.

It would help if people actually mentioned the bonds they're looking at. If it's the new Nationwide (NW) online bonds where, for some reason, NW has now decided that interest cannot be paid out during the term then in theory, yes, all taxed in the final year. However, posters have reported that they asked NW about this and NW says that it will report the interest to HMRC annually. Someone at NW really hasn't thought this through...

*The statement from Willsowen is incorrect - "most" fixed rate bonds will give you the option to have interest paid away every year, in fact in my experience most insist on it.

Most insist on having the interest paid away? 

Most providers. It's becoming more common for some of them to allow interest to accrue in the account, though.

Band7

wmb194 said:

Band7 said:

wmb194 said:

Patr100 said:

Steve_xx said:

newuser2011 said:

Hello all, am I right in thinking of all interest is paid at the end of a 2 year fixed term, that interest counts only towards the tax free allowance for that single tax year (and I can’t split and spread over two years as the interest was earned over two years)? Thank you!

The tax is liable in the tax year in which you received payment of interest into the account.

If you can't access it, you don't pay tax on it in that year.

 Interest becomes taxable at the point it’s made available to you to withdraw. For most fixed rate bonds, although interest may be earned and credited to your balance annually, interest is actually paid out at maturity so the interest earned will fall to be taxed in the tax year in which the product matures

https://www.willisowen.co.uk/deposit/tax-on-your-savings

But it depends on whether the bond gave you the option to have the interest paid away during its term. If the option was given to you but you chose to have it accrue in the account then the income still arises in the year in which it was credited to the account.

It would help if people actually mentioned the bonds they're looking at. If it's the new Nationwide (NW) online bonds where, for some reason, NW has now decided that interest cannot be paid out during the term then in theory, yes, all taxed in the final year. However, posters have reported that they asked NW about this and NW says that it will report the interest to HMRC annually. Someone at NW really hasn't thought this through...

*The statement from Willsowen is incorrect - "most" fixed rate bonds will give you the option to have interest paid away every year, in fact in my experience most insist on it.

Most insist on having the interest paid away? 

Most providers. It's becoming more common for some of them to allow interest to accrue in the account, though.

I have just had a look at the top 20 5 year bonds. 6 of them state interest must be paid away https://moneyfacts.co.uk/savings-accounts/fixed-rate-bonds/

MoneySaver16

Do Atom share their FSCS protection with anyone? I can see them in the checker but I’m unclear on how to use it to see who shares with who!

I’m not close to the limit but it would
be great to know if I have any crossover just in case

Ocelot

wmb194 said:

But it depends on whether the bond gave you the option to have the interest paid away during its term. If the option was given to you but you chose to have it accrue in the account then the income still arises in the year in which it was credited to the account.

This.  Presumably this is why  I have to pay tax every year on FRBs, but can't access the interest until the end of the term.

andyhicks88

I opened an Atom 1yr Fix and 6 month Fix because I already have the app and so was going to just keep them on standby incase rates drop further elsewhere before I can get in, but didn't realize the deposit window was only 7 days! So not long for me to decide!  Plus I need to get the funds for it from Santander, which by some accounts, could take days itself! 

Band7

andyhicks88 said:

 Plus I need to get the funds for it from Santander, which by some accounts, could take days itself! 

Or it could take seconds, which it did for me with a 5 figure sum earlier this week. If you payment gets held up by Santander, ring them straight away to get it released

happybagger

Rudyson said:

andyhicks88 said:

Have Kent Reliance pulled their fixed savers as I don't see them on their website? Though there is a message that comes up about exclusive fixed rate accounts for existing customers?

The 1 and 2 year fixed rates are showing as available when logged in, so it looks as if existing members can still get them.

For any non-customers wondering what they're missing out on:

1 yr 4.45%
2 yr 4.75%

andyhicks88

Band7 said:

andyhicks88 said:

 Plus I need to get the funds for it from Santander, which by some accounts, could take days itself! 

Or it could take seconds, which it did for me with a 5 figure sum earlier this week. If you payment gets held up by Santander, ring them straight away to get it released

Hopefully that is the case!

jak22

Apologies if mentioned above but Charter have put 1 yr (4.35%) 18 mnth (4.51%) and 2 yr (4.61%) back on their main page for new customers. This might not be of interest for anyone looking for the highest rate, but for anyone who recently opened a 2 yr at 4.95% and still has the funding window open it might give some confirmation of recent rates trends.