When you pay tax on savings, just spoken to HMRC

Ozzig

The MSE article here 

https://www.moneysavingexpert.com/savings/personal-savings-allowance/

Advises " You're taxed on savings interest in the tax year you can access it "

Just called HMRC and the advisor confirmed the tax is due when they receive notification from the bank you're been paid it, not when you have access to it.
A 5-year bond would require tax to be paid in each of the five years, on each year's accrued interest.

I know from previously asking here and on the HMRC forum that I will get answers that both contradict and support this, from forum users and HMRC admins.

So, can we ask the MSE team if it is possible to use their might to get formal clarification?
Or at least re-word the article in the meantime?

Personally, I'd rather the former, ideally before I submit my SA for 22-23
But the latter is potentially misleading as it stands.

I suspect there will be a million and one potential replies to my thread all anecdotally proving the advisor I spoke to as being right or wrong and explaining how individuals have only declared accessible interest or have always declared paid interest.

Ayr_Rage

I have been doing SA for 20 years and have always declared the interest and tax deducted (old system) in the year in which it was paid as noted on the certificates received from the companies at the end of the tax year.

This included bonds that spanned several tax years and had inaccessible annual interest.

HMRC have never in all that time queried my method of filing and the balancing payments due have always been within pennies of what I had expected.

Swipe

I agree, HMRC needs to formally clear this up in writing  on their portal once and for all so there is zero ambiguity. 

friolento

Ayr_Rage said:

I have been doing SA for 20 years and have always declared the interest and tax deducted (old system) in the year in which it was paid as noted on the certificates received from the companies at the end of the tax year.

This included bonds that spanned several tax years and had inaccessible annual interest.

HMRC have never in all that time queried my method of filing and the balancing payments due have always been within pennies of what I had expected.

This matches my approach / experience.

Albermarle

Ozzig said:

The MSE article here 

https://www.moneysavingexpert.com/savings/personal-savings-allowance/

Advises " You're taxed on savings interest in the tax year you can access it "

Just called HMRC and the advisor confirmed the tax is due when they receive notification from the bank you're been paid it, not when you have access to it.
A 5-year bond would require tax to be paid in each of the five years, on each year's accrued interest.

I know from previously asking here and on the HMRC forum that I will get answers that both contradict and support this, from forum users and HMRC admins.

So, can we ask the MSE team if it is possible to use their might to get formal clarification?
Or at least re-word the article in the meantime?

Personally, I'd rather the former, ideally before I submit my SA for 22-23
But the latter is potentially misleading as it stands.

I suspect there will be a million and one potential replies to my thread all anecdotally proving the advisor I spoke to as being right or wrong and explaining how individuals have only declared accessible interest or have always declared paid interest.

Is it possible for a forum moderator to take this up with the main MSE site.?@MallyGirl @enthusiasticsaver

The subject crops up regularly on here and as the poster above clearly explains, you get contradictory answers from forumites and from HMRC themselves.
However  the balance of opinion is that what is stated in the MSE article linked is actually wrong/misleading.

MSE_James

Just to say that I have shared this thread with colleagues here to see if there's anything we can do to clarify matters.

mebu60

friolento said:

Ayr_Rage said:

I have been doing SA for 20 years and have always declared the interest and tax deducted (old system) in the year in which it was paid as noted on the certificates received from the companies at the end of the tax year.

This included bonds that spanned several tax years and had inaccessible annual interest.

HMRC have never in all that time queried my method of filing and the balancing payments due have always been within pennies of what I had expected.

This matches my approach / experience.

Ditto.....

Olinda99

without wishing to stir the pot too much or come down on one or other side of the fence in my view two things are certain:

1. it is each person's responsibility in law to get their tax declaration correct and in particular things like I didn't know or it was confusing will not be accepted as an excuse

2. as far as HMRC is concerned, the basis for all discussion about what is and what is not correct are their various internal and published documents and technical manuals

Albermarle

Olinda99 said:

without wishing to stir the pot too much or come down on one or other side of the fence in my view two things are certain:

1. it is each person's responsibility in law to get their tax declaration correct and in particular things like I didn't know or it was confusing will not be accepted as an excuse

2. as far as HMRC is concerned, the basis for all discussion about what is and what is not correct are their various internal and published documents and technical manuals

As far as Point 2) is concerned. My own opinion is that HMRC internal documents etc are the 'theory', but in practice if the provider notifies them of annual interest ( which most seem to do) they just base the tax calculation on that, as this is much simpler for them, as they can not possibly know the details of the savings account where the interest is generated.

Bigwheels1111

I opted for annual payouts to alleviate this issue.

I will also file a self assessment for two reasons, 1 I like to be taxed correctly and do not want to chase HMRC to sort a refund etc.

2 This year I will breach the 10k limit. Thus needing to file a return.

Reporting it directly every year solves the issue anyway.

refluxer

My question is - if a bank offering a fixed rate account (of more than 1 year's duration) issues a certificate of interest annually, is that definite proof that they're also reporting that interest to HMRC on an annual basis ?