Interest taxed at maturity unfair

bristolleedsfan

metrobus said:

I think Nationwide declares everything at the end of the period and not annually.

Soon after Nationwide launched current style of online bonds they told me after liasing with Nationwide tax team that Interest on multi year fixed rates get reported to HMRC annually.

What led you to think what you posted?

badmemory

My Nationwide ones are declared annually.

metrobus

bristolleedsfan said:

metrobus said:

I think Nationwide declares everything at the end of the period and not annually.

Soon after Nationwide launched current style of online bonds they told me after liasing with Nationwide tax team that Interest on multi year fixed rates get reported to HMRC annually.

What led you to think what you posted?

That is great news thank you, I have been juggling things around the last few months thinking’s that was not the case, everything is now so much easier.👍

Sea_Shell

Dazed_and_C0nfused said:

RL11 said:

With interest rates finally rising to a level that makes it worth putting cash into a savings account, I am staggered that MSE (Martin) have not got involved in asking HMRC to change their guidance, that says interest is declared at maturity and NOT according to the annual interest certificates that we receive. If you go for a 5 year fixed rate, that pays interest into the same account (to compound interest), you only need about £4k to end up having to pay tax on the interest! It is totally unfair that despite only getting approx £220 per year, each year (for 5 years), you get taxed on ALL the interest received after 5 years! It's also understandable that, as we receive annual interest certificates and the provider reports interest annually, that most people would not realise that tax is due on the total amount at maturity. At the very least it should be possible to carry forward, the annual £1k (or £500) allowance, so the amount at maturity on a 5 year fixed rate, has to exceed 5 years worth of allowance.

I suspect the scenario that you have outlined doesn't actually happen very much.

If the provider is providing your with an annual certificate showing the interest has been credited to your account they are highly likely to be reporting it like that to HMRC as well.

I don't recollect any poster on here ever claiming that a bank or building society had reported it like that AND then reported the cumulative interest against the final tax year.

Have you checked what has been reported to HMRC each year by the provider?

I hope so.

DH had a 5 year fix with Yorkshire Bank (Virgin), and they sent a tax certificate showing the annual interest, but only for the final 2 years (?).   This is what I based my tax calculations on, as it was about £1200 per year.

Luckily (or should I say, as planned), DH wasn't working by then, and so would have been able to earn up to his PA and beyond before tax became an issue.   But it could have caught us out if he'd still been working.

It's a shame that HMRC did away with the page where you could log on and see what interest had been logged, and by who, against your tax account.   

Since beginning drawdown, we are now awaiting a tax rebate, as HMRC still think he'll be earning that interest every year, when in fact in the 22/23 tax year, he had ZERO interest paid in his name. 

Albermarle

It's a shame that HMRC did away with the page where you could log on and see what interest had been logged, and by who, against your tax account

It is a shame as now you are never quite 100% certain what is happening.

Especially as the HMRC guidance indicates that for non access fixed term accounts, interest should be taxed on maturity. However in practice this seems to be not what happens for most accounts.

As I have said before, most likely HMRC just record the interest as it is reported to them, and they do not have the time or inclination to check what type of account it is coming from. 

VNX

JAlbermarle said:

It's a shame that HMRC did away with the page where you could log on and see what interest had been logged, and by who, against your tax account

It is a shame as now you are never quite 100% certain what is happening.

Especially as the HMRC guidance indicates that for non access fixed term accounts, interest should be taxed on maturity. However in practice this seems to be not what happens for most accounts.

As I have said before, most likely HMRC just record the interest as it is reported to them, and they do not have the time or inclination to check what type of account it is coming from. 

I agree with your last statement but it makes a mockery of it all really having a rule that savings interest is taxed at maturity/when the interest becomes available to you but taxed each year 

I wonder if one had a multi year bond where any tax should be calculated at maturity but HMRC recorded it annually, I’ve interesting if yiu dusputed this with proof of the length of bind and evidence yiu can’t access the interest for X years 

bristolleedsfan

VNX said:

JAlbermarle said:

It's a shame that HMRC did away with the page where you could log on and see what interest had been logged, and by who, against your tax account

It is a shame as now you are never quite 100% certain what is happening.

Especially as the HMRC guidance indicates that for non access fixed term accounts, interest should be taxed on maturity. However in practice this seems to be not what happens for most accounts.

As I have said before, most likely HMRC just record the interest as it is reported to them, and they do not have the time or inclination to check what type of account it is coming from. 

I wonder if one had a multi year bond where any tax should be calculated at maturity but HMRC recorded it annually, I’ve interesting if yiu dusputed this with proof of the length of bind and evidence yiu can’t access the interest for X years 

Likely as per last statement in previous post that you said you agreed with that HMRC records interest as it is reported to them.

VNX

bristolleedsfan said:

VNX said:

JAlbermarle said:

It's a shame that HMRC did away with the page where you could log on and see what interest had been logged, and by who, against your tax account

It is a shame as now you are never quite 100% certain what is happening.

Especially as the HMRC guidance indicates that for non access fixed term accounts, interest should be taxed on maturity. However in practice this seems to be not what happens for most accounts.

As I have said before, most likely HMRC just record the interest as it is reported to them, and they do not have the time or inclination to check what type of account it is coming from. 

I wonder if one had a multi year bond where any tax should be calculated at maturity but HMRC recorded it annually, I’ve interesting if yiu dusputed this with proof of the length of bind and evidence yiu can’t access the interest for X years 

Likely as per last statement in previous post that you said you agreed with that HMRC records interest as it is reported to them.

I agreed with the other poster saying that it probably gets reported annually not that I agree with the practice.

it would be interesting if you were to dispute with HMRC on say a five year bond where you can’t touch the interest yet find are taxed per year on it.

Frequentlyhere

Well this sounds messy.

So one of my accounts currently is a Vanquis 2 year fix set to pay monthly, with the interest credited to the same savings account. I think I can change this to an external account whenever.

Are we saying that there's a difference in how that income is treated based upon whether it's credited to my savings account or to elsewhere?  Sounds.....like that that shouldn't be the case, if it is!

Rodders53

metrobus said:

I think Nationwide declares everything at the end of the period and not annually.

No.  https://www.nationwide.co.uk/savings/help/when-your-interest-is-paid/