The Top Fixed Interest Savings Discussion Area

jimexbox

Unfortunately there are a lot of folk who have never known anything but extremely low base rates, and think its normal. I hope their lenders correctly assessed their ability to pay increased mortgage costs. 

Notepad_Phil

Consumerist said:

duckson said:

Thought it might to be best to ask this here regarding PSA £500/£1k limits and how each tax years interest is calculated....

Fixed accounts are often offered in monthly or yearly or at maturity interest payments but does this affect the amount of earned interest in a tax year? 
For example if I take out a 1yr fix and the at maturity interest payment option today, is all the tax adjudged to have been earned at maturity (so 2023-24 tax year) or would it accrue monthly anyway (monthly/yearly/maturity doesnt matter) from a reporting to HMRC perspective so approx 6 months in this tax year and 6 month in next?

Interest earned is taxed in the financial year it is paid, irrespective of when it is earned.

In principle, for example, the interest from a five-year fixed interest account is taxed in the financial year it is paid - this would be in the year of maturity if interest is paid into the same account.

In practice, however, it probably depends on whether the savings institution reports the interest payments as yearly payments or a single payment at maturity.

Do you have a reference for that, as unless I'm misunderstanding you that would seem to contradict what previous posters on MSE have said. Up to now I've been led to believe that if there was an option to take interest out monthly or annually, then even if you didn't choose that option then the interest was taxed in the month/year that the interest was added onto the account balance.

alternate

jimexbox said:

Unfortunately there are a lot of folk who have never known anything but extremely low base rates, and think its normal. I hope their lenders correctly assessed their ability to pay increased mortgage costs. 

It was 5% in 2008.  A lot of people with mortgages have never had to pay high interest rates but they will have experienced them.

Rheumatoid

alternate said:

jimexbox said:

Unfortunately there are a lot of folk who have never known anything but extremely low base rates, and think its normal. I hope their lenders correctly assessed their ability to pay increased mortgage costs. 

It was 5% in 2008.  A lot of people with mortgages have never had to pay high interest rates but they will have experienced them.

5% Pah! I dreamt of that when I bought my first house in 1990 

alternate

Rheumatoid said:

alternate said:

jimexbox said:

Unfortunately there are a lot of folk who have never known anything but extremely low base rates, and think its normal. I hope their lenders correctly assessed their ability to pay increased mortgage costs. 

It was 5% in 2008.  A lot of people with mortgages have never had to pay high interest rates but they will have experienced them.

5% Pah! I dreamt of that when I bought my first house in 1990 

heh, when I looked up the history of the base rate I admit I had no idea how high it was at certain points.  Not old enough to know double figures.

Daliah

alternate said:

Rheumatoid said:

alternate said:

jimexbox said:

Unfortunately there are a lot of folk who have never known anything but extremely low base rates, and think its normal. I hope their lenders correctly assessed their ability to pay increased mortgage costs. 

It was 5% in 2008.  A lot of people with mortgages have never had to pay high interest rates but they will have experienced them.

5% Pah! I dreamt of that when I bought my first house in 1990 

heh, when I looked up the history of the base rate I admit I had no idea how high it was at certain points.  Not old enough to know double figures.

The way things are going, you'll soon be old enough for double figures.......

RG2015

Daliah said:

alternate said:

Rheumatoid said:

alternate said:

jimexbox said:

Unfortunately there are a lot of folk who have never known anything but extremely low base rates, and think its normal. I hope their lenders correctly assessed their ability to pay increased mortgage costs. 

It was 5% in 2008.  A lot of people with mortgages have never had to pay high interest rates but they will have experienced them.

5% Pah! I dreamt of that when I bought my first house in 1990 

heh, when I looked up the history of the base rate I admit I had no idea how high it was at certain points.  Not old enough to know double figures.

The way things are going, you'll soon be old enough for double figures.......

Inflation maybe but I don’t think even I am old enough for a double digit base rate. 

(Retired 10 years ago.)

ColdIron

10.38% on 04/09/91. 14.88% on 06/10/89 when I bought my first property

https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp

Rollinghome

People are rightly concerned about making mortgage payments if the current rate continues to rise.  Much less is said about the up side for mortgage payers if they can get through that time. 

I bought a house, not my first, around the very first date shown on that list, when apparently the rate was 11.25%. The high rates were due to high inflation and my big mortgage was all but wiped out by inflation over the next few years.  I only kept it due to the benefits of MIRAS and paid it off as soon as MIRAS ended.

Life is bit of a lottery depending on whether you land on the snakes or the ladders. Most of us do a bit of both.

Patr100

jimexbox said:

Unfortunately there are a lot of folk who have never known anything but extremely low base rates, and think its normal. I hope their lenders correctly assessed their ability to pay increased mortgage costs. 

So do I. The problem for payers today is that while rates were higher eg in the 90s - mortgages were relatively more affordable -
eg deposits of 5% or 10% were doable and house price to salary ratio was a stretch (sometimes a max of 3.5 annual salary)  , but achievable. Back then fixing for up to 5 years was often the way to go. I was lucky. when I bought my first home in 1993, house prices had dropped at the time.
But as rates rise today , borrowers will actually be paying a relatively higher portion of income, than we were in the 90s.