Declaring savings interest

Monanore

How should tax on interest on multi-year fixed bonds be declared ?

The HMRC guidance to institutions on submitting the BBSI return lists what interest payments should be included – specifically stating ‘paid or credited’ in the year - contradicting the SAIM 'arising' rule.

Nationwide, which used to allow withdrawals on fixed bonds, now says that bonds are not accessible. Does anybody know whether they will now not report interest until the final year?

Albermarle

It is a good summary of this grey area.

Regarding Nationwide. I have a 3 year fixed rate with them. On its first anniversary, ( during 23/24)  interest was credited to the account . However when I look at my overall interest/tax records on their website for this account, it says £0 interest was recorded for tax purposes for this account in 23/24.
However that does mean definitively that they have not notified HMRC of the annual interest for 23/24. I will have to check my personal tax account later in the Summer to check I presume.

slinger2

Interesting. I'd always assumed that if interest was credited to the account then that meant it was counted in that year's tax calculation.

Bigwheels1111

I opted for annual payout to another bank as wanted interest as an income.

Only one was compounded, a very small interest payment of £250.

I filled my self assessment on the 16th April, still waiting for it to reflect on my records.

The £250 was included im my figures, right or wrong.

I'm sure HMRC will let me know.

I made a decision to call them to jump start the return, told them I'm over the 10k limit.

3 days later a letter asked me to file said return.

The return said I owe £0.00.

So very happy.

Ayr_Rage

@Albermarle be VERY wary of what Nationwide show regarding 23/24 interest.

Although I already have the paper Certificate of Interest for one of my accounts, both the app and web page showed £0.00 for all my accounts for the last tax year for the last 19 days.

The app has just updated today !

slinger2

Just looked at my Nationwide "Interest and Tax Paid" (web and app). The £100 Nationwide Fairer Share Payment which was credited to my current account, now appears there (correctly it seems). Pretty sure it wasn't included when I looked a week or so ago. Another £20 tax for me.

Albermarle

Ayr_Rage said:

@Albermarle be VERY wary of what Nationwide show regarding 23/24 interest.

Although I already have the paper Certificate of Interest for one of my accounts, both the app and web page showed £0.00 for all my accounts for the last tax year for the last 19 days.

The app has just updated today !

Just checked and now its there !
Hopefully this means it should be treated by HMRC as a 23/24 payment, although strictly it should be taxable when it is available in 25/26 ( see many previous threads over this issue)

Bobziz

Albermarle said:

Ayr_Rage said:

@Albermarle be VERY wary of what Nationwide show regarding 23/24 interest.

Although I already have the paper Certificate of Interest for one of my accounts, both the app and web page showed £0.00 for all my accounts for the last tax year for the last 19 days.

The app has just updated today !

Just checked and now its there !
Hopefully this means it should be treated by HMRC as a 23/24 payment, although strictly it should be taxable when it is available in 25/26 ( see many previous threads over this issue)

NW will report interest in multi year bonds annually to HMRC. They will assume it's accessible and therefore taxable unless you let them know otherwise. As you say, interest on these products should only be taxable on maturity, but the system is in effect enabling savers to determine how they are taxed. My preference is taxed at maturity but others will benefit from taxing annually.

Monanore

Bobziz said:

NW will report interest in multi year bonds annually to HMRC. They will assume it's accessible and therefore taxable unless you let them know otherwise. As you say, interest on these products should only be taxable on maturity, but the system is in effect enabling savers to determine how they are taxed. My preference is taxed at maturity but others will benefit from taxing annually.

@Bobziz
Are you saying that self-assessors are choosing for themselves whether to declare interest on a fixed multi-year product in each year or as a total in the final year and that HMRC acccept that even when the institution has sent the amounts in each year  ??

Dazed_and_C0nfused

Monanore said:

Bobziz said:

NW will report interest in multi year bonds annually to HMRC. They will assume it's accessible and therefore taxable unless you let them know otherwise. As you say, interest on these products should only be taxable on maturity, but the system is in effect enabling savers to determine how they are taxed. My preference is taxed at maturity but others will benefit from taxing annually.

@Bobziz
Are you saying that self-assessors are choosing for themselves whether to declare interest on a fixed multi-year product in each year or as a total in the final year and that HMRC acccept that even when the institution has sent the amounts in each year  ??

Apparently around 12 million people self assess each year.

Do you think HMRC are resourced to investigate everyone where there is a discrepancy between the figures on the tax return and what banks have reported 🤔

Remember why it's called Self Assessment.  It certainly isn't because a lot are filed by people who are self employed.

Monanore

@Dazed_and_C0nfused

Good point, D&C.  

I'm looking through the prism of PAYE where your tax liability is BASED on the BBSI return.

I'm sure you know all about the much-discussed uncertainty over 'when tax arises' on fixed bonds.

It seems unfair that self-assessors aren't given more definitive guidelines.  It must be a worry, for instance, to think "Have I done the right thing not declaring interest this year on this account because it fits the HMRC non-accessibilty rule, when I know that the provider will in reality be sending it each year in the return" ?  ( as far as I know only NS&I actually cumulate interest and send it in the final year ).