Would you grab a 2 year bond @ 6.17%?

masonic

soulsaver said:

BR tax payer doesn't (have to) declare bank interest unless it exceeds a certain level, £10k (think).
I don't know about the SA requirements, but I'm going to exceed the limit (above) so may have to research it.

For SA, you are asked to declare all relevant income, so must provide a figure for interest if you have received at least £1.

For non-SA there is always an obligation to declare any income HMRC doesn't already know about that would create a tax liability. £10k interest is the threshold to register for SA.

Dazed_and_C0nfused

soulsaver said:

BR tax payer doesn't (have to) declare bank interest unless it exceeds a certain level, £10k (think).
I don't know about the SA requirements, but I'm going to exceed the limit (above) so may have to research it.

What rate of tax you pay isn't strictly relevant.

Someone who is a basic rate taxpayer and completes a tax return, for instance someone paying a tiny bit of HICBC, will just declare their interest on the return.

Someone who is a higher rate taxpayer and doesn't need to complete a return for any reason doesn't need to do anything about the interest.  Unless it reaches £10k/year in which case they should register for Self Assessment.

caper7

I quite agree, now that I'm aware of this issue the safest thing is simply to have interest paid out, thus avoiding any trouble.

I still think the whole thing is nonsensical and imagine pretty much everyone will be completely unaware of this rule. I was.
It also seems rather unfair if you were to have just one five year bond and were unable to make use of your starter rate for savings/psa for 4 of them. 
HMRC should allow you to roll over any unused allowance if this is how they want to tax savings bonds in my humble opinion.