The Top Fixed Interest Savings Discussion Area

alternate

typistretired said:

Bigwheels1111 said:

ST73 said:I

changearound1 said:

According to the Nationwide website Fixed Rate Online Bonds have annual interest which 'can only be paid into the bond, not into another account.'

This is contrary to what it says on Moneyfacts and should be considered before opening an account.

Please forgive my ignorance, I’m am still new to this and looking at opening a fixed term for my savings. Why does this matter if you can withdraw it anyway after a year? 

Tax, Say you have 25k saved.
At 4% that would be 1k, which is tax free for most.
If it paid out after 3 year it would be just over 3k and tax on 2k, £400 tax.
Very basic workings.

If paid once a year no tax.

If you have a 3 year saver they usually add the interest yearly not after 3 years

There is a question tho.  If they add it back to the fixed account you don't have access to that interest until the full 3 years are up - so when are you liable for tax on that interest?  If you get the interest paid to another account then that will obviously become taxable when paid.

Consumerist

alternate said:

typistretired said:

Bigwheels1111 said:

ST73 said:I

changearound1 said:

According to the Nationwide website Fixed Rate Online Bonds have annual interest which 'can only be paid into the bond, not into another account.'

This is contrary to what it says on Moneyfacts and should be considered before opening an account.

Please forgive my ignorance, I’m am still new to this and looking at opening a fixed term for my savings. Why does this matter if you can withdraw it anyway after a year? 

Tax, Say you have 25k saved.
At 4% that would be 1k, which is tax free for most.
If it paid out after 3 year it would be just over 3k and tax on 2k, £400 tax.
Very basic workings.

If paid once a year no tax.

If you have a 3 year saver they usually add the interest yearly not after 3 years

There is a question tho.  If they add it back to the fixed account you don't have access to that interest until the full 3 years are up - so when are you liable for tax on that interest?  If you get the interest paid to another account then that will obviously become taxable when paid.

And that's the rub.

In principle, HMRC taxes interest in the tax year it is paid but if the savings institution reports interest annually, HMRC seems to regard it is paid yearly, whether it is accessible or not.

alternate

Consumerist said:

alternate said:

typistretired said:

Bigwheels1111 said:

ST73 said:I

changearound1 said:

According to the Nationwide website Fixed Rate Online Bonds have annual interest which 'can only be paid into the bond, not into another account.'

This is contrary to what it says on Moneyfacts and should be considered before opening an account.

Please forgive my ignorance, I’m am still new to this and looking at opening a fixed term for my savings. Why does this matter if you can withdraw it anyway after a year? 

Tax, Say you have 25k saved.
At 4% that would be 1k, which is tax free for most.
If it paid out after 3 year it would be just over 3k and tax on 2k, £400 tax.
Very basic workings.

If paid once a year no tax.

If you have a 3 year saver they usually add the interest yearly not after 3 years

There is a question tho.  If they add it back to the fixed account you don't have access to that interest until the full 3 years are up - so when are you liable for tax on that interest?  If you get the interest paid to another account then that will obviously become taxable when paid.

And that's the rub.

In principle, HMRC taxes interest in the tax year it is paid but if the savings institution reports interest annually, HMRC seems to regard it is paid yearly, whether it is accessible or not.

It makes sense that it is taxable when the bank reports it.  Technically you earned that interest but it is a bit harsh that on, say a 5 year bond, you will have to pay 4 years tax up front.

moi

DF Capital have 1 year at 4.15% (& a less competitive 2 year for 4.4%)

 https://www.dfcapital.co.uk/savings/fixed-rate-deposit/

EthicsGradient

ICICI is offering 3.35% for a 6 month bond direct from them ( https://www.icicibank.co.uk/en/personal/savings-accounts/fixed-rate-savings-account/hisave-fixed-rate-account ) (plus a 0.1% loyalty bonus for existing customers with a maturing fixed rate bond), or 3.6% for a 9 month one via Raisin. The latter appears in the Moneyfacts list (not in MSE, but MSE doesn't do 9 month as a specific length), but the former in neither. The rate was set, they say, on 3rd Oct. Minimum £1,000, and FSCS protected, so seems to beat the 6 month ones listed on MSE. Can anyone see a problem with it?

bristolleedsfan

alternate said:

typistretired said:

Bigwheels1111 said:

ST73 said:I

changearound1 said:

According to the Nationwide website Fixed Rate Online Bonds have annual interest which 'can only be paid into the bond, not into another account.'

This is contrary to what it says on Moneyfacts and should be considered before opening an account.

Please forgive my ignorance, I’m am still new to this and looking at opening a fixed term for my savings. Why does this matter if you can withdraw it anyway after a year? 

Tax, Say you have 25k saved.
At 4% that would be 1k, which is tax free for most.
If it paid out after 3 year it would be just over 3k and tax on 2k, £400 tax.
Very basic workings.

If paid once a year no tax.

If you have a 3 year saver they usually add the interest yearly not after 3 years

There is a question tho.  If they add it back to the fixed account you don't have access to that interest until the full 3 years are up - so when are you liable for tax on that interest?  If you get the interest paid to another account then that will obviously become taxable when paid.

I asked Nationwide today, this was response

I have received the following response to my enquiry from our tax team;

We report to HMRC at the end of each tax year, confirming all interest which has been paid to the member within the tax year. Interest certificates can be requested by members but these are just for members information if they want it.

janusdesign

EthicsGradient said:

ICICI is offering 3.35% for a 6 month bond direct from them ( https://www.icicibank.co.uk/en/personal/savings-accounts/fixed-rate-savings-account/hisave-fixed-rate-account ) (plus a 0.1% loyalty bonus for existing customers with a maturing fixed rate bond), or 3.6% for a 9 month one via Raisin. The latter appears in the Moneyfacts list (not in MSE, but MSE doesn't do 9 month as a specific length), but the former in neither. The rate was set, they say, on 3rd Oct. Minimum £1,000, and FSCS protected, so seems to beat the 6 month ones listed on MSE. Can anyone see a problem with it?

is my reading of the t&c correct in that you can only make one deposit with this bond?

also - "The initial deposit can be made by cheque or direct debit from your Nominated Linked Account."... direct debit ??

jaypers

Charter have launched a 1 year paying 4.31%

janusdesign

Charter Savings have launched a 1-Yr bond @ 4.31% (min 5k - monthly/annually interest)

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

EthicsGradient

janusdesign said:

EthicsGradient said:

ICICI is offering 3.35% for a 6 month bond direct from them ( https://www.icicibank.co.uk/en/personal/savings-accounts/fixed-rate-savings-account/hisave-fixed-rate-account ) (plus a 0.1% loyalty bonus for existing customers with a maturing fixed rate bond), or 3.6% for a 9 month one via Raisin. The latter appears in the Moneyfacts list (not in MSE, but MSE doesn't do 9 month as a specific length), but the former in neither. The rate was set, they say, on 3rd Oct. Minimum £1,000, and FSCS protected, so seems to beat the 6 month ones listed on MSE. Can anyone see a problem with it?

is my reading of the t&c correct in that you can only make one deposit with this bond?

also - "The initial deposit can be made by cheque or direct debit from your Nominated Linked Account."... direct debit ??

Well, only one deposit is not a problem by cheque, which they seem to say would be payable to your name followed by the ICICI account number, which is not going to go astray. Using DD for a one-off deposit does seem a bit strange - it would take a few days to set up, normally. Maybe that's because they want to avoid the "small test deposit, followed by the full amount" that many do if transferring direct from a current account. But it does sound like it's more convenient for them than us.