NS&I Interest

bjbyorkshire

Can someone confirm to me what the help line at NS&I have recently told me please.

If I have rolled over a 3 year Guaranteed Growth Bond for 3 more years, ie I will have held this bond for 6 years when it matures in 2026.  The help desk said that this means that I will receive the interest into the account annually but will not pay any tax (if I need to pay tax on the interest) until the final year when the whole amount is withdrawn and the account is closed?

 Seems a bit odd to me that interest has been accrued for each of those years and yet tax is only due in the final year which obviously means a larger tax bill in the final year.  Obviously I will be going over the £1000 tax free amount available and will need to declare the amount earned above this.

Hope that makes sense as I am going round in circles trying to understand it.

Thanks

eskbanker

bjbyorkshire said:

Obviously I will be going over the £1000 tax free amount available and will need to declare the amount earned above this.

If you already self-assess or earn >£10K of interest then you declare the whole amount, not just the excess over £1K.

If you don't already self-assess and earn <£10K of interest then you don't need to declare anything.

Swipe

Yes, that is correct. Interest is taxable at maturity where you have the option of withdrawing it. Did you not declare the previous 3 years interest at maturity?

bjbyorkshire

I don’t earn £10K in interest but I do have a retirement pension of about £8.5K and a tiny private pension plus savings interest.   I gave husband the marriage allowance and have interest from savings other than NS&I.  All together my earned income plus savings interest is quite a bit less than £17,200 ish that would bring me into taxation.  Husband on the other hand will need to declare the savings interest he has over £1,000 as he has a more pension income so less allowance.

Any other answers?

bjbyorkshire

eskbanker said:

bjbyorkshire said:

Obviously I will be going over the £1000 tax free amount available and will need to declare the amount earned above this.

If you already self-assess or earn >£10K of interest then you declare the whole amount, not just the excess over £1K.

If you don't already self-assess and earn <£10K of interest then you don't need to declare anything.

I don’t self assess as my total income and interest is under £17,000 ish.

Monanore

You’ve raised some very interesting issues.

I think Swipe is right - If you rollover a 3 year bond for another 3 years it can’t be the same bond. At the time you decide to rollover I submit that even if the same name and number is retained you effectively ARE taking out another bond for tax purposes.

Otherwise under the rule that says interest on inaccessible accounts should be accumulated and paid at maturity would mean you would pay only in year 6; or if you rolled over again, in year 9 !! This is patently silly.

I think self-assessors should therefore declare 3 years’ interest in year 3, year 6 etc.

I think those in PAYE should expect a charge for each 3 years.  We know that since the rule change in May 19 NS&I have submitted a return to HMRC of 0 in early years and the total in the maturity year.   Surely they must send the total in year 3 ?  

Has anybody asked them this question ?

Expanding the issue to other institutions – if on maturity of a building society fixed bond you decide to take out another with the same funds that is surely a separate bond for tax purposes – even if the building society uses the same account number – again it would make no sense otherwise.

Thoughts, anyone ?

 

bjbyorkshire

Thanks Monanore, you are understanding what I am asking but 3 advisors at NS&I seem to have great difficulty in sending me the year end tax certificate for a three year bond rolled over in 11 April 2020 and rolled over again on 11 April 2023.  

The first bond had a different number from the second bond so clearly a new bond was set up.  In my thinking this should have interest shown on a 3 year bond and would be taxed in 2023/24 tax year.  This information should be available to me from NS&I.  I am sure that HMRC will alter my tax code and take any money they say I owe from my pension but…. Husband had the same bond held for the same periods of time and he will definitely go over his £1,000 taxed at £0.  

I will await a certificate that NS&I say the back office will send to me online as I am registered for paperless statements but I don't hold out much hope that it will be the one I am seeking, I expect it to be just another copy of the 2 they have already sent.  

They won’t t talk to me about my husband’s account unless he first speaks to them and says it is ok for them to discuss things with me.  He has not got a clue what I am wittering on about when I discuss it with him and has no wish to speak to anyone at NS&I as he says HMRC will ask for any tax that he owes in due course.  My reply is yes, but they may charge him interest for not filling in a form to inform them.  

Does anyone else on this forum hold the NS&I 3 year Guaranteed Growth Bond and have they received this year’s certificate owed to HMRC for the year 2023/24.

Thanks for being patient and I will update if I do receive the form, online, that I have asked for this week.

eskbanker

bjbyorkshire said:

They won’t t talk to me about my husband’s account unless he first speaks to them and says it is ok for them to discuss things with me.  He has not got a clue what I am wittering on about when I discuss it with him and has no wish to speak to anyone at NS&I as he says HMRC will ask for any tax that he owes in due course.  My reply is yes, but they may charge him interest for not filling in a form to inform them.

To be honest, I think he has more of a clue than you do, in that HMRC will "ask for any tax that he owes in due course", and won't "charge him interest for not filling in a form to inform them", unless (as above) his taxable interest in any year exceeds £10K, assuming he doesn't already self-assess, i.e. there's no requirement to declare interest simply on the basis of it exceeding £1K if that's what you believed.

masonic

bjbyorkshire said:

Thanks Monanore, you are understanding what I am asking but 3 advisors at NS&I seem to have great difficulty in sending me the year end tax certificate for a three year bond rolled over in 11 April 2020 and rolled over again on 11 April 2023.  

The first bond had a different number from the second bond so clearly a new bond was set up.  In my thinking this should have interest shown on a 3 year bond and would be taxed in 2023/24 tax year.  This information should be available to me from NS&I.  I am sure that HMRC will alter my tax code and take any money they say I owe from my pension but…. Husband had the same bond held for the same periods of time and he will definitely go over his £1,000 taxed at £0. 

The bonds are for fixed terms that cannot be changed. When you roll them over, this involves taking the proceeds and reinvesting into a new bond with a new fixed term. Interest becomes accessible when each bond matures. You are not renegotiating the fixed term of the original bond from 3 to 6 years.

Swipe

If you are on PAYE I wouldn't worry about it. Let HMRC decide how and when to tax you. It's only something you need to be concerned about if you self assess.

km1500

interest becomes taxable in the tax year it becomes available or accessible irrespective of whether you do actually take it or access it 

thus after 3 years you take the accumulated interest and that is what you declare in that years tax return 

this is because in that tax year you have the option of taking the interest - the fact that you decide not to take it but to roll it over is irrelevant