Tax on fixed savings accounts

Krakkkers

Thanks for the advice.

Krakkkers

Can only find webchat where you talk to a computer, is there one where you get a real person?

Krakkkers

What is the best phone number to contact HMRC about a savings interest breakdown or is this something that can be done on my personal tax page.

sheramber

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

Phone

Call HMRC for help with:

• questions about Income Tax and Class 4 National Insurance, including issues with:
  • your tax code
  • tax overpayments or underpayments
  • a P800 tax calculation
• identification and verification problems if you’re trying to register for a personal tax account
• Marriage Allowance including:
  • making a backdated claim if your spouse or civil partner has died
  • applying for Marriage Allowance if you do not have a National Insurance number, because you do not intend to work or study in the UK
  • cancelling your claim
• questions about tax on savings income (including refunds)
• general enquiries about Individual Savings Accounts (ISAs)

Have your National Insurance number with you when you phone.

Krakkkers

Well i got through to HMRC this morning and got a breakdown of the interest reported to them and it seems that those 3 and 5 year fixed savings accounts report annual interest to HMHC and it becomes liable to tax straight away, not at the end of the term even though i can't access the interest.

BootcamperHF

It may be that when you made the initial investment over the 3 or 5 year term you had the option of having the interest paid to you each year or rolled over and added to the initial capital.  Even if you choose to roll over the interest the account allowed you to take the interest each year (you just chose not to) and as such it is taxable in the year in which it is credited.  

Ayr_Rage

@BootcamperHF if you read the whole topic and the link to the HMRC rules, the OP is unable to access the interest at all and the HMRC advisor in that link says that it should only be taxed on maturity of a bond in that case.

What counts as a bond however is not clear.

uknick

Krakkkers said:

Well i got through to HMRC this morning and got a breakdown of the interest reported to them and it seems that those 3 and 5 year fixed savings accounts report annual interest to HMHC and it becomes liable to tax straight away, not at the end of the term even though i can't access the interest.

What makes you think you can't access the interest?  There are very few products that you can never access the interest.  You might have to pay a penalty but it is still accessible.

The only product I've ever come across that was definitely not accessible and didn't declare the annual interest was a Barclays bond my partner had some years ago.  At no time before the maturity date was she given a statement as to how much interest was actually earned.  Therefore, she could not declare anything to HMRC. 

BootcamperHF

@Ayr_Rage I'm aware that the OP cannot access the interest but that may be because they chose to have it added rather than paid out each year.  If the option to take the interest was available but not chosen HMRC consider that it is taxable each year - the OP just chose not to access it until maturity.

Albermarle

As said before, the practicality is most likely that
1) The provider informs HMRC annually of the interest.
2) HMRC has no idea of the terms of the account ( and is probably less than interested/no time to look into probably Millions of interest notifications)
3) HMRC taxes the interest annually as reported by the provider, regardless of what their own rules say, as this is quickest and simplest for them.