The Top Fixed Interest Savings Discussion Area

kidwell25

TiVo_Lad said:

kidwell25 said:

jak22 said:

Tandem 5 YR 5.0% (1 YR 4.5%, 2YR 4.6% 3YR 4.65%)

Was about to jump on the 5 year bond, but see that interest must be paid away annually. So if I don't actually need the annual income, and on the assumption that rates seem likely to drop over the coming 5 years, the United Trust Bank at 4.9% that *can* be compounded is still the better option, correct?

Don't forget the tax implication though. If you get the interest annually (and can access it), that will count towards your savings interest allowance in that tax year. If it's compounded into the bond AND you can't access it until then end of the fixed period, you could end up paying tax on that interest at the end of the fixed period.

Yes indeed. In this case because there was an option for the interest to be paid annually it counts toward your allowance each tax year even if you opt to only take it at maturity. I did ring UTB to be certain of that as I'm making additional pension contributions via salary sacrifice to keep myself as a basic rate tax payer so really didn't want the tax liability to all fall into the final year!

Doctor_Who

The Raisin/Isbank 2 year fix pays interest annually back to the Raisin holding account. The example interest on £1000 shows no compounding. Interestingly, when I was looking for a 2 year fix, the Al Rayan fix through Raisin said interest was paid at maturity, but I have a fix directly with Al Rayan that pays quarterly, so terms seem to vary if you go direct or through Raisin.

bertsilver

Vanquis 1 year fix 4.95%

EthicsGradient

kidwell25 said:

TiVo_Lad said:

kidwell25 said:

jak22 said:

Tandem 5 YR 5.0% (1 YR 4.5%, 2YR 4.6% 3YR 4.65%)

Was about to jump on the 5 year bond, but see that interest must be paid away annually. So if I don't actually need the annual income, and on the assumption that rates seem likely to drop over the coming 5 years, the United Trust Bank at 4.9% that *can* be compounded is still the better option, correct?

Don't forget the tax implication though. If you get the interest annually (and can access it), that will count towards your savings interest allowance in that tax year. If it's compounded into the bond AND you can't access it until then end of the fixed period, you could end up paying tax on that interest at the end of the fixed period.

Yes indeed. In this case because there was an option for the interest to be paid annually it counts toward your allowance each tax year even if you opt to only take it at maturity. I did ring UTB to be certain of that as I'm making additional pension contributions via salary sacrifice to keep myself as a basic rate tax payer so really didn't want the tax liability to all fall into the final year!

I'd like to know where the thing about "did you have a choice when you opened the account?" comes from. On the HMRC forum, they seem to say that doesn't matter:

Question:
"When I created the time deposit, I had the option to pay it out annually to my other bank account (therefore it's obviously available), or to credit it to the time deposit account itself for compounding (and in this case the interest is only available for withdrawal at maturity) Given the 2 options, I chose the interest credited to fixed deposit for compounding. Since I have made the choice at the beginning, it cannot be changed or reversed afterwards. In this case, the interest has been credited monthly to my fixed deposit account (although I cannot withdraw it). Shall I report the interest credited in each tax year, or consider it as "unavailable" and report it in lump sum at maturity?"

HMRC reply:
"Bank interest that is paid to you each year into your account, which you can access, is taxable in the year that it arises.  

Where the interest is held in the account, until the account matures, only then will the total sum of interest arising over the whole term, be taxable in the tax year it is paid."
Which tax year to declare interest for multi-year fixed deposit - Community Forum - GOV.UK (hmrc.gov.uk)

GalacticaActual

Nationwide Building Society launched a Fairer Share Online Bond (also a Fairer Share Branch Bond) on the 18th May 2023 offering 4.75% fixed for 2 years. Not available to new customers.

“We'll pay the interest on each anniversary of the date you opened your account (regardless of when the account was funded), at the end of the term, and on the day your account closes.”

Various T&C apply:

https://www.nationwide.co.uk/savings/fairer-share-online-bond/

Ozzig

In their document ...
https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2440

Example 2 mentions ...

"Since the terms and conditions of the bond allow Sam to draw on the funds, although with a penalty, the interest arises and is taxable each year as it is credited."

Most bonds seem to allow access in very exceptional circumstances which are to be reviewed individually. Does that equate to no access ?

lon_don

GalacticaActual said:

Nationwide Building Society launched a Fairer Share Online Bond (also a Fairer Share Branch Bond) on the 18th May 2023 offering 4.75% fixed for 2 years. Not available to new customers.

“We'll pay the interest on each anniversary of the date you opened your account (regardless of when the account was funded), at the end of the term, and on the day your account closes.”

Various T&C apply:

https://www.nationwide.co.uk/savings/fairer-share-online-bond/

Is this a good rate for 2yr fixed for a big name bank/bs ?

TiVo_Lad

HMRC don't care about what options you had, they only care when the taxable event takes place. If you get paid interest annually, but you can't access it, it doesn't count in that tax year.

refluxer

lon_don said:

GalacticaActual said:

Nationwide Building Society launched a Fairer Share Online Bond (also a Fairer Share Branch Bond) on the 18th May 2023 offering 4.75% fixed for 2 years. Not available to new customers.

“We'll pay the interest on each anniversary of the date you opened your account (regardless of when the account was funded), at the end of the term, and on the day your account closes.”

Various T&C apply:

https://www.nationwide.co.uk/savings/fairer-share-online-bond/

Is this a good rate for 2yr fixed for a big name bank/bs ?

It certainly looks to be currently the highest-paying 2 year bond from a high-street bank or building society. There are, however, many FSCS-protected, well-regarded alternative online-only banks offering higher rates - right up to 4.96%.

See the list here : https://moneyfactscompare.co.uk/savings-accounts/2-year-fixed-rate-bonds/?quick-links-first=false

ForumUser7

lon_don said:

GalacticaActual said:

Nationwide Building Society launched a Fairer Share Online Bond (also a Fairer Share Branch Bond) on the 18th May 2023 offering 4.75% fixed for 2 years. Not available to new customers.

“We'll pay the interest on each anniversary of the date you opened your account (regardless of when the account was funded), at the end of the term, and on the day your account closes.”

Various T&C apply:

https://www.nationwide.co.uk/savings/fairer-share-online-bond/

Is this a good rate for 2yr fixed for a big name bank/bs ?

Out of the big names such as Santander, lloyds banking group, NatWest banking group, Barclays, nationwide etc. I think so currently, but much higher rates are available with smaller organisations, and also with some other well known providers ~ https://moneyfactscompare.co.uk/savings-accounts/2-year-fixed-rate-bonds/?quick-links-first=false