The Top Fixed Interest Savings Discussion Area

becky_rtw

Now here's a question on interest. If you are compounding as we are on a five year how is that accounted for?

We will have no earnings for each of the 5 years except interest so should be beneath the max amount each year, but do you need to let HMRC know and is it all counted on the 5th year (at which point it could become an issue depending on what else might be maturing of our shorter fixes that we need to do)? 

TiVo_Lad

becky_rtw said:

Now here's a question on interest. If you are compounding as we are on a five year how is that accounted for?

We will have no earnings for each of the 5 years except interest so should be beneath the max amount each year, but do you need to let HMRC know and is it all counted on the 5th year (at which point it could become an issue depending on what else might be maturing of our shorter fixes that we need to do)? 

It depends on when the interest becomes available to you. If it's paid in one lump sum at the end of term, that's the "tax point" for the interest and your tax liability will crystallise there and then on the whole lot. If it's paid away on an annual basis, or you can at least withdraw it from the bond, you're only liable for the tax on the interest received in that tax year.

wmb194

TiVo_Lad said:

becky_rtw said:

Now here's a question on interest. If you are compounding as we are on a five year how is that accounted for?

We will have no earnings for each of the 5 years except interest so should be beneath the max amount each year, but do you need to let HMRC know and is it all counted on the 5th year (at which point it could become an issue depending on what else might be maturing of our shorter fixes that we need to do)? 

It depends on when the interest becomes available to you. If it's paid in one lump sum at the end of term, that's the "tax point" for the interest and your tax liability will crystallise there and then on the whole lot. If it's paid away on an annual basis, or you can at least withdraw it from the bond, you're only liable for the tax on the interest received in that tax year.

Even if not taken, if there was an *option* to have it paid away when it was opened then it is treated as annual interest.

In practice it's moot as the provider will likely report it annually to HMRC in any event.

VNX

If it’s a fixed bond with no access whenever the interest is paid into the account the Tax is liable in the tax year the interest is accessible I believe?

VNX

New DF capital one year bond 4.73%

StayinAlive

Just had an email from Hodge asking for maturity instruction for a 1 year fixed rate bond maturing soon.

They give the usual options. However, "If we don’t hear from you by then, in line with our Terms and Conditions, we’ll place your funds into a Variable Rate Cash ISA." (My bold). Interesting

EthicsGradient

StayinAlive said:

Just had an email from Hodge asking for maturity instruction for a 1 year fixed rate bond maturing soon.

They give the usual options. However, "If we don’t hear from you by then, in line with our Terms and Conditions, we’ll place your funds into a Variable Rate Cash ISA." (My bold). Interesting

Is it in an ISA now?

StayinAlive

EthicsGradient said:

StayinAlive said:

Just had an email from Hodge asking for maturity instruction for a 1 year fixed rate bond maturing soon.

They give the usual options. However, "If we don’t hear from you by then, in line with our Terms and Conditions, we’ll place your funds into a Variable Rate Cash ISA." (My bold). Interesting

Is it in an ISA now?

No. As I said, it's just a fixed rate bond

becky_rtw

Thanks for the interest replies all 😎 

t1redmonkey

StayinAlive said:

EthicsGradient said:

StayinAlive said:

Just had an email from Hodge asking for maturity instruction for a 1 year fixed rate bond maturing soon.

They give the usual options. However, "If we don’t hear from you by then, in line with our Terms and Conditions, we’ll place your funds into a Variable Rate Cash ISA." (My bold). Interesting

Is it in an ISA now?

No. As I said, it's just a fixed rate bond

Probably an admin error, someone's used their pre-written template for maturing fixed term ISAs instead of maturing fixed term bonds.