savings interest

jessand

Hi
I've searched everywhere for info on longer term fixed saving in relation to the starting rate for tax.  HMRC doesn't help so can anyone tell me the rules regarding this.  I'm sure I've seen somewhere that interest needs to be able to be withdrawn within each tax year to qualify. Has anyone got details of this please or a link where it can be found?  Many thanks.

Dazed_and_C0nfused

Have a look at this.

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

But ultimately I think what's really key is when the bank/building society report the interest to HMRC.

Also, there are no special rules regarding interest being taxed at the savings starter rate.  

Do you understand the order in which the Personal Allowance, savings starter rate and savings nil rate must be used?

jessand

Thank you. I believe you use the starting rate before the savings nil rate.  Good point about rules being general and not specific to SRFT, explains why I couldn't find anything about it - I was looking in the wrong place.  I've been looking at a Tesco 2 yr fixed bond which states that you can recieve interest monthly or annually into your nominated account (or leave it in) so that would appear ok according to the link you posted.  Thanks again

Dazed_and_C0nfused

Yes, you use any spare Personal Allowance first.

Then the savings starter rate band (if you have any)

Then finally the savings nil band (aka PSA)

wmb194

jessand said:

Hi
I've searched everywhere for info on longer term fixed saving in relation to the starting rate for tax.  HMRC doesn't help so can anyone tell me the rules regarding this.  I'm sure I've seen somewhere that interest needs to be able to be withdrawn within each tax year to qualify. Has anyone got details of this please or a link where it can be found?  Many thanks.

Whether you choose to or not, if the account offers the *possibility* to have the interest paid away then it arises in the tax year it's credited to the account. The Tesco savings bonds would meet this criteria.

jessand

Thanks wmb.