Beware: Nationwide Fixed Rate Bond interest payment conditions

PeterGKenyon

I have just discovered that annual interest paid on a 3-year Fixed Rate Nationwide Building Society Bond is NOT paid to another designated account. So it will be 'locked" together with next year's interest until maturity. I'm writing to complain, but I think other savers should be aware of this condition, which was not transparent to my wife and I when we invested.

eskbanker

Sorry, but the ability to have interest paid out to an external account isn't a standard feature to be expected from all accounts, so if it was important to you then you should have checked the terms before applying.

The current two-page document outlining product terms is clear:

If the fixed term is for more than one year, we’ll pay interest into your account on each anniversary of your account opening and at the end of the term.

but does yours say the same?

Reed_Richards

Surely when you were completing the account application and there wasn't an option to say where you wanted the interest to be paid, that should have been a massive clue?

km1500

it would not give rise to a liability if the op corrected anything hmrc sent to reflect the true position ie all tax is liable in year 3

Albermarle

JamesRobinson48 said:

To add insult to injury, you may find that Nationwide reports interest on this product to HMRC annually, possibly giving rise to an income tax liability for the account holder each year, even though the account holder has no means of accessing that interest until maturity. 

Although annual reporting can also be tax beneficial rather than it all being counted in the final year. It will be different from person to person whether it is advantageous or disadvantageous.

35har1old

PeterGKenyon said:

I have just discovered that annual interest paid on a 3-year Fixed Rate Nationwide Building Society Bond is NOT paid to another designated account. So it will be 'locked" together with next year's interest until maturity. I'm writing to complain, but I think other savers should be aware of this condition, which was not transparent to my wife and I when we invested.

Do you fill in a self assessment  form?
If you don't it's not up to you to report it.

35har1old

km1500 said:

it would not give rise to a liability if the op corrected anything hmrc sent to reflect the true position ie all tax is liable in year 3

That only applies to accounts with no excess 

km1500

35har1old said:

km1500 said:

it would not give rise to a liability if the op corrected anything hmrc sent to reflect the true position ie all tax is liable in year 3

That only applies to accounts with no excess 

like the bond the OP has