When to pay tax on interest for multi-year savings accounts?

EthicsGradient

GeoffTF said:

I have a lot of no access term accounts and pay the tax annually. My next door neighbour is a tax adviser. She says that is OK, despite what the HMRC internal manual says. I can choose whether to pay annually or at maturity. She says HMRC will see what I am doing. Provided that I am consistent, they will be happy. That has been the case for me.

I'm not convinced they have enough detail about my savings accounts, or will be diligent enough to work things out, if SmartSave turns out to not report the interest annually (and they've made it clear they're not going to give me any more clues if they will or not). If they don't report interest to HMRC for next tax year, but I include it on my (non-itemised) self-assessment, HMRC won't bat an eyelid (I shouldn't pay tax on it, I reckon), but at the end of 3 years, if SmartSave do tell them about the interest all in one go (which may or may not mean I should pay some tax on it - I can't tell yet), there'll be now way for me to tell, and I don't think HMRC is going to wonder if I declared it over 3 years - that is too much effort for them. They may just see my total declared interest was less than had been reported to them that year, and then assume I was hiding some of it.And I'll need the screenshots to explain what happened.

metrobus

I have a Nationwide 3 year fixed rate online bond.
In the T&Cs it states interest (4.75%) is paid Annually at the end of the day before each anniversary of account opening. Or monthly at the end of each calendar month. It will also be paid at the end of the term and on the day your account closes.
So I assume it will be liable for tax in the financial year it’s paid.and NW will declare the amount each year to the tax authorities.

Albermarle

metrobus said:

I have a Nationwide 3 year fixed rate online bond.
In the T&Cs it states interest (4.75%) is paid Annually at the end of the day before each anniversary of account opening. Or monthly at the end of each calendar month. It will also be paid at the end of the term and on the day your account closes.
So I assume it will be liable for tax in the financial year it’s paid.and NW will declare the amount each year to the tax authorities.

I have the same bond and I think/hope you are right, but I wouldn't bet my house on it.

nottinghammer

NSandI's Green Savings Bonds (3 years fixed, no option to cancel) are another example, and they state on their website that tax is due in the final year: "The interest you earn on Green Savings Bonds will count towards your taxable income in the tax year your Bond matures." (https://www.nsandi.com/products/green-savings-bonds). But they also say "We calculate the interest daily and add it to your Bond on each anniversary of your investment.". See https://www.nsandi.com/products/green-savings-bonds.