How is Al Rayan Bank's Sharia Savings Account Taxed?

sgog

Al Rayan Bank offers a 3-year savings account with 4.57% expected profit.

Their information page states:

Your profit is calculated monthly and will be paid quarterly to your nominated account or, you have the option to retain the deposit profit in your account to be paid all together on maturity. 

My question is whether this means that the interest is, when retaining the deposit profit in the account, monthly/quarterly taxable or only at maturity.

If the whole profit is taxable at maturity then this means that the profit would exceed the allowance of higher tax rate payers (as the account has a minimum deposit of 5,000).

Albermarle

sgog said:

Al Rayan Bank offers a 3-year savings account with 4.57% expected profit.

Their information page states:

Your profit is calculated monthly and will be paid quarterly to your nominated account or, you have the option to retain the deposit profit in your account to be paid all together on maturity. 

My question is whether this means that the interest is, when retaining the deposit profit in the account, monthly/quarterly taxable or only at maturity.

If the whole profit is taxable at maturity then this means that the profit would exceed the allowance of higher tax rate payers (as the account has a minimum deposit of 5,000).

Presumably the same as with other providers. HMRC register the interest ( or 'profit' in this case) when the provider informs them . It seems from other threads that many providers of long term fixed rate accounts, inform HMRC annually, even if the interest is not payable until the fixed term ends. However not all do it seems .

sgog

Albermarle said:

Presumably the same as with other providers. HMRC register the interest ( or 'profit' in this case) when the provider informs them . It seems from other threads that many providers of long term fixed rate accounts, inform HMRC annually, even if the interest is not payable until the fixed term ends. However not all do it seems .

Is there a way to tell?

wmb194

sgog said:

Al Rayan Bank offers a 3-year savings account with 4.57% expected profit.

Their information page states:

Your profit is calculated monthly and will be paid quarterly to your nominated account or, you have the option to retain the deposit profit in your account to be paid all together on maturity. 

My question is whether this means that the interest is, when retaining the deposit profit in the account, monthly/quarterly taxable or only at maturity.

If the whole profit is taxable at maturity then this means that the profit would exceed the allowance of higher tax rate payers (as the account has a minimum deposit of 5,000).

The key bit in your quote is, "...will be paid... to your nominated account or, you have the option to retain..." Because you have or have had the option to have the interest paid away - i.e. it is or was available for withdrawal - it will arise in the tax year it is paid.

masonic

It is declared to HMRC as arising for tax when added to the account (credit: bristolleedsfan who asked them). I don't think all of their fixed term accounts have had the option to pay interest away, at least I hold one that does not and I always choose that option if available.