Interest taxed at maturity unfair

uptdale

RL11 said:

Is there anyone (other than HMRC - via their forum responses) think that declaring interest earned at maturity (rather than according to the providers annual certificate) makes any logical sense? 🤔 

The logic is that the interest does not "arise" until you can access it.  A more pertinent question is why HMRC's guidance to the providers of tax certificates seems to be at odds with their advice to the recipients of the interest.

bristolleedsfan

RL11 said:

Is there anyone (other than HMRC - via their forum responses) think that declaring interest earned at maturity (rather than according to the providers annual certificate) makes any logical sense? 🤔 

A key question asked on HMRC forum which I did not notice an answer when tax on savings interest was deducted at source, tax was deducted in tax year that interest was credited to accounts, what guidance/legislation been changed since then or was it a case of savings providers incorrectly applying the correct guidance/legislation for decades.

Delburn

bristolleedsfan said:

RL11 said:

Is there anyone (other than HMRC - via their forum responses) think that declaring interest earned at maturity (rather than according to the providers annual certificate) makes any logical sense? 🤔 

A key question asked on HMRC forum which I did not notice an answer when tax on savings interest was deducted at source, tax was deducted in tax year that interest was credited to accounts, what guidance/legislation been changed since then or was it a case of savings providers incorrectly applying the correct guidance/legislation for decades.

HMRC guidance for individuals making loans at SAIM9100 is consistent with their current position and archived back to at least 2007.

https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim9100

However, the regulations for Banks and Building Societies were different and defined "payment" to include "credit".

https://www.legislation.gov.uk/uksi/1990/2232/made

Based on HMRC's position, it seems that the legislation was inconsistent between deduction at source and liability of the underlying tax payer.  It would seem to be HMRC's position that for multiple decades they collected tax at source which was not yet properly due from the underlying tax payer.