The Top Fixed Interest Savings Discussion Area

SJMALBA

VNX said:

Oaknorth one year bond up to 4.7pc 

Now 4.74%.

https://oaknorth.co.uk/personal-savings/fixed-term/

alternate

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.

wmb194 said:

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 said:

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?

It is crazy that even now nobody is 100% clear on when fixed term interest is reported.  As said. it may well depend on individual banks policies.

I gave up and had all my interest paid away yearly.  Makes self assessment a damn site easier.

Ozzig

I just asked mine what interest was paid in the tax year 22/23 and they told me  via mail / letter / secure message via their website.

EthicsGradient

t1redmonkey said:

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.

You'd hope it's a communication error, but if the error was in thinking it's OK to open an ISA for the member when they hadn't asked, they need to be told to stop. Worth replying to them to tell them they must not do that.

wmb194

Ozzig said:

I just asked mine what interest was paid in the tax year 22/23 and they told me  via mail / letter / secure message via their website.

Yup, that part's easy. The harder part is knowing whether you should include it in that tax year's earnings or at the end of the term. E.g., Nationwide's current issues of its online bonds will pay interest to the account annually but because there is no option at any point to have interest paid away it counts as inaccessible. So, according to HMRC, interest for all years should be reported in the tax year the savings bond matures. Easy too, right?

The problem is that Nationwide says it will report the interest annually to HMRC and you can be certain that HMRC doesn't know the terms of your account - because it isn't a field in the data template HMRC sends to institutions - so it will be expecting to see the interest declared annually... It's a mess. To avoid this issue I always try to have interest paid away but I've made the mistake of opening a couple of these Nationwide bonds...

Ozzig

wmb194 said:

Ozzig said:

I just asked mine what interest was paid in the tax year 22/23 and they told me  via mail / letter / secure message via their website.

Yup, that part's easy. The harder part is knowing whether you should include it in that tax year's earnings or at the end of the term. E.g., Nationwide's current issues of its online bonds will pay interest to the account annually but because there is no option at any point to have interest paid away it counts as inaccessible. So, according to HMRC, interest for all years should be reported in the tax year the savings bond matures. Easy too, right?

The problem is that Nationwide says it will report the interest annually to HMRC and you can be certain that HMRC doesn't know the terms of your account - because it isn't a field in the data template HMRC sends to institutions - so it will be expecting to see the interest declared annually... It's a mess. To avoid this issue I always try to have interest paid away but I've made the mistake of opening a couple of these Nationwide bonds...

I see what you mean.
You should declare only the interest you have access to.
They declare interest you don't have access to.

Who will be deemed as telling the truth?

SJMALBA

SJMALBA said:

VNX said:

Oaknorth one year bond up to 4.7pc 

Now 4.74%.

https://oaknorth.co.uk/personal-savings/fixed-term/

SmartSave now up to 4.74% too - matching, rather than beating (even with 10k min.)...

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Tandem 5 year fix 4.70%.

SJMALBA

Charter up again, also at 4.74% for 1 Year.

Their other bonds up too.

https://www.chartersavingsbank.co.uk/Products/FixedRateBond

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Oxbury 4.75% 1 year.... Who's next