When you pay tax on savings, just spoken to HMRC

auser99

An NSI advisor was adamant that their 3 year bond is taxed at the 3 year anniversary.

No idea on other multi year bonds, have so far avoided them for this reason!

Ozzig

refluxer said:

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 ? 

The advisor I spoke to is sending me a letter to show which banks have advised them of how much interest, but the total amount he gave me is just £9 short of what I calculated as all the interest/accrument for that year across everything.

Earlier in the year I asked each bank if they declared interest on bonds where the money is not accessible and had a range of answers from,

No, you have to register it yourself.
No, we only declare it when the bond matures.
Yes, every year we declare it even if not available.

So regardless of their actual answers, so far it appears they do.

subjecttocontract

Ozzig said:

refluxer said:

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 ? 

The advisor I spoke to is sending me a letter to show which banks have advised them of how much interest, but the total amount he gave me is just £9 short of what I calculated as all the interest/accrument for that year across everything.

Earlier in the year I asked each bank if they declared interest on bonds where the money is not accessible and had a range of answers from,

No, you have to register it yourself.
No, we only declare it when the bond matures.
Yes, every year we declare it even if not available.

So regardless of their actual answers, so far it appears they do.

That brings to mind a recent HMRC TV ad telling us......Tax doesn't need to be taxing !......😠😠

Ozzig

subjecttocontract said:

That brings to mind a recent HMRC TV ad telling us......Tax doesn't need to be taxing !......😠😠

Nor consistant!

Notepad_Phil

auser99 said:

An NSI advisor was adamant that their 3 year bond is taxed at the 3 year anniversary.

No idea on other multi year bonds, have so far avoided them for this reason!

My experience of multi-year bonds was that where they offer an option to pay out the interest then they report the annual interest to the HMRC regardless of whether you took that option or not. Though whether that is true for absolutely every bond I can't say.

The NS&I green savings bond does not give you the option to pay out the interest and they do appear to only report interest to the HMRC at maturity - indeed they are quite explicit that they will do this and on their website say "the interest is taxable so it will count towards your Personal Savings Allowance in the tax year that your Bond matures."

Albermarle

Notepad_Phil said:

auser99 said:

An NSI advisor was adamant that their 3 year bond is taxed at the 3 year anniversary.

No idea on other multi year bonds, have so far avoided them for this reason!

My experience of multi-year bonds was that where they offer an option to pay out the interest then they report the annual interest to the HMRC regardless of whether you took that option or not. Though whether that is true for absolutely every bond I can't say.

The NS&I green savings bond does not give you the option to pay out the interest and they do appear to only report interest to the HMRC at maturity - indeed they are quite explicit that they will do this and on their website say "the interest is taxable so it will count towards your Personal Savings Allowance in the tax year that your Bond matures."

IIRC there are a small number of other multi year similar savings accounts that state something similar, Zopa comes to mind. Not sure though.

Ozzig

Albermarle said:

Notepad_Phil said:

auser99 said:

An NSI advisor was adamant that their 3 year bond is taxed at the 3 year anniversary.

No idea on other multi year bonds, have so far avoided them for this reason!

My experience of multi-year bonds was that where they offer an option to pay out the interest then they report the annual interest to the HMRC regardless of whether you took that option or not. Though whether that is true for absolutely every bond I can't say.

The NS&I green savings bond does not give you the option to pay out the interest and they do appear to only report interest to the HMRC at maturity - indeed they are quite explicit that they will do this and on their website say "the interest is taxable so it will count towards your Personal Savings Allowance in the tax year that your Bond matures."

IIRC there are a small number of other multi year similar savings accounts that state something similar, Zopa comes to mind. Not sure though.

One of mine said...

"We can confirm that there will be no tax certificates for the 2022/2023 tax year as none of your accounts paid interest during the 2022/2023 tax year."

On their app / online banking, it shows the balance as not changed from the start. With separate interest figures for "earned value" and  "Paid at maturity" 

However, based on the HMRC total value, it does look like they have declared it anyway. I'll know for sure when I receive the letter with all the figures from HMRC.

Hoenir

refluxer said:

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 ? 

Yes. As they are certifying what your account has been credited within the tax year. 

Whether the interest is accessible or not doesn't come into the equation. 

Always worth saving PDF copies of the issued certificates issued. Provides an easy way of double checking the HMRC's figures. Many are sent by private email messages these days and can be obtained online directly from every financial institution that bank and savings accounts are held with. 

On  separate note. NSI do show the accrued interest on their 3 year Green bonds on the annual anniversary at the end of years 1 and 2.  

janusdesign

Hoenir said:

refluxer said:

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 ? 

Yes. As they are certifying what your account has been credited within the tax year. 

Whether the interest is accessible or not doesn't come into the equation. 

Always worth saving PDF copies of the issued certificates issued. Provides an easy way of double checking the HMRC's figures. Many are sent by private email messages these days and can be obtained online directly from every financial institution that bank and savings accounts are held with.

I opened a 1-Yr fix October 2022 and had the first two months interest paid back into the fixed-rate account (unable to access), but for the 10 months after that, the interest was paid to my nominated account (I could access).

the two Certificates on Interest (last tax year and this current one) gave the "correct" total amounts for each year, but I too assumed I only declared the interest amounts when they became accessible to me - so those first 2 months wouldn't be included in last year's return, but included in this year's, when the fix matured and was paid back to my nominated account.

for me, there would be no tax implications either way for 22-23, but there will be for 23-24 - hopefully if/when MSE confirm the correct situation, it will help me to do the correct thing for my future SA returns.

boingy

It all depends on what is on those certificates of interest and how often the bank issue them. The problem is that different banks do different things.