Interest taxed at maturity unfair

masonic

ScarletBea said:

From my experience, all banks and institutions (including Nationwide) report interest to HMRC when that amount is made available to the customer.
If the interest is capitalised then that is not available and so it's not reported.

Could you share how you verified what was reported to HMRC please? For example, did you get the info from HMRC, from an annual certificate of interest, or something else?

ScarletBea

masonic said:

ScarletBea said:

From my experience, all banks and institutions (including Nationwide) report interest to HMRC when that amount is made available to the customer.
If the interest is capitalised then that is not available and so it's not reported.

Could you share how you verified what was reported to HMRC please? For example, did you get the info from HMRC, from an annual certificate of interest, or something else?

I keep track of all interest on an excel spreadsheet and also do my own calculations of tax owed/refunded, so when they send me a different amount I can tell.
Also because last year, before I realised that Hargreaves Lansdown doesn't send them the interest information from the Active Savings, I was on the phone with an assistant going through all the info she had to find out the gap. So she would say "Bank X was amount Y", I would reply "check!" and so on down the list, haha, until I got left with the HL interest missing... This year I've already sent them the letter with the interest from 22/23.

Anyway, I think that if you call HMRC you can ask them to confirm the interest the banks/BS told them. Better wait around end of August/September, I'm not sure exactly when they get everything.

masonic

ScarletBea said:

masonic said:

ScarletBea said:

From my experience, all banks and institutions (including Nationwide) report interest to HMRC when that amount is made available to the customer.
If the interest is capitalised then that is not available and so it's not reported.

Could you share how you verified what was reported to HMRC please? For example, did you get the info from HMRC, from an annual certificate of interest, or something else?

I keep track of all interest on an excel spreadsheet and also do my own calculations of tax owed/refunded, so when they send me a different amount I can tell.
Also because last year, before I realised that Hargreaves Lansdown doesn't send them the interest information from the Active Savings, I was on the phone with an assistant going through all the info she had to find out the gap. So she would say "Bank X was amount Y", I would reply "check!" and so on down the list, haha, until I got left with the HL interest missing... This year I've already sent them the letter with the interest from 22/23.

Anyway, I think that if you call HMRC you can ask them to confirm the interest the banks/BS told them. Better wait around end of August/September, I'm not sure exactly when they get everything.

Interesting, so when you've compared notes with HMRC, you've held multi-year fixed term accounts with capitalised interest (not including those in Active Savings) that credited some interest but weren't included? If so, it seems not only is there confusion around what HMRC requires savings institutions to report, but also they are telling customers one thing and doing another.

ChilliBob

What a right mess eh?

I have some two, three and five year fixes already, as I'm sure most on this thread do. Thus far they are all annual of monthly. In this case, I expect:

* A certificate each year showing X in interest
* To pay tax, if relevant, on X in that given year

Regardless of whether I have said to keep the interest in the account or push it to a current account. 

I considered an 'at maturity' only account, from Oak North, who said they only give you a certificate at the end, so I would *expect* to only report and pay tax after the end of the 5 year fix. However, I wasn't certain whether they would report to HMRC and not me so decided not to do it, yet. Especially if the difference annually vs maturity could push me into a different tax bracket, with other implications.

I wonder if you asked a question, had HMRC admin answer it, if you could do include this reply and url in your supporting notes of something? 

metrobus

bristolleedsfan said:

metrobus said:

They state it on the link posted earlier. https://www.nationwide.co.uk/savings/help/when-your-interest-is-paid/

Look  at Fixed rate online bonds and you will see a word missing that is included in most of their other account types.

Within thread on same subject you said you were "hoping" Nationwide would report Interest to HMRC annually, I would have thought both easy and prudent to have asked them.

https://forums.moneysavingexpert.com/discussion/comment/79681043/#Comment_79681043

It states it under Fixed rate online bonds, like I’ve already explained to you, read it carefully and you will see the difference.😂😂

I, like you and so many others assumed they treated all accounts the same and did not read the link I’ve posted we were wrong and obviously the guy that told you did not read it either. 

I phoned them today and they have confirmed the link is correct and why wouldn’t it be.

I can get around not going over £10000 interest and not doing a self assessment by juggling the interest payments on other accounts from monthly to yearly , but it’s a pain in the bum. Anywsy happy I’ve got it all sorted with them👍

Ocelot

A few months ago the received wisdom (general consensus) on this board was that a providers would report your interest to the HMRC if an option was originally offered to pay away the interest to another account, even if you rejected this offer.

I'm unsure of the veracity of this view, but I do know that all my fixed rate accounts report every year and have done so since 2016.

EthicsGradient

metrobus said:

bristolleedsfan said:

metrobus said:

They state it on the link posted earlier. https://www.nationwide.co.uk/savings/help/when-your-interest-is-paid/

Look  at Fixed rate online bonds and you will see a word missing that is included in most of their other account types.

Within thread on same subject you said you were "hoping" Nationwide would report Interest to HMRC annually, I would have thought both easy and prudent to have asked them.

https://forums.moneysavingexpert.com/discussion/comment/79681043/#Comment_79681043

It states it under Fixed rate online bonds, like I’ve already explained to you, read it carefully and you will see the difference.😂😂

I, like you and so many others assumed they treated all accounts the same and did not read the link I’ve posted we were wrong and obviously the guy that told you did not read it either. 

I phoned them today and they have confirmed the link is correct and why wouldn’t it be.

I can get around not going over £10000 interest and not doing a self assessment by juggling the interest payments on other accounts from monthly to yearly , but it’s a pain in the bum. Anywsy happy I’ve got it all sorted with them👍

It's not clear what you mean; the wording for Fixed Rate Online Bond is identical to that for Fixed Rate Branch Bond, Member Online Bond, Nationwide Fairer Share Branch Bond, and Nationwide Fairer Share Online Bond - "On the anniversary of the date you opened your account, at the end of the term, and on the day your account closes.". And, to be clear, "at the end of the term" is not a qualifier for "on the anniversary", but an additional day - see the conditions: "If the fixed term is for more than one year, we’ll pay interest into your account on each anniversary of your account opening and at the end of the term.".

The difference from their other bonds is that it's on the anniversary, not "at the end of the day before each anniversary" as several are, and that there's no monthly option. But none of them say it could be more than a year between interest being paid.

(And we still have to presume that "when your interest is paid" matches with "the dates we inform HMRC that interest was paid").

metrobus

If you can’t work it out give them a ring and let them explain to you.

Like I’ve said and had confirmed by them  earlier,  different accounts within Nationwide  treat interest payment reporting in different ways , if you don’t like what you read so be it, don’t shoot the messenger.👍

EthicsGradient

metrobus said:

If you can’t work it out give them a ring and let them explain to you.

Like I’ve said and had confirmed by them  earlier,  different accounts within Nationwide  treat interest payment reporting in different ways , if you don’t like what you read so be it, don’t shoot the messenger.👍

It would be a lot more helpful for a forum if you explained what the difference you see is, rather than everyone here ringing them up to say "there's someone online who says there's a subtle difference - can you explain it?". I don't think you're a "messenger" yet - you're not supplying a message.

Bricks

I have only just realised that this is an issue. In my case, I am just looking at one year fixed savings accounts, but opened around the middle of a tax year.

In that case, if you choose annual interest then it all gets taxed in the tax year it matures.

For monthly interest, it was unclear whether it would make any difference whether it's paid back into the account or out into an external account.

I have just asked Atom bank; their advice is that it doesn't make any difference. So if I have it paid back into the account, the statement I get for the tax year will include each monthly interest payment that falls within that tax year. Even though none of that interest will actually be available to me until the account matures.