Shepherd's Friendly 5 year fixed bond

GasAttacK77

I'm considering opening a Shepherds Friendly 5 Year Fixed Rate Bond at 4.46%.

1) Are we sure profits are not compounded, meaning if you invested £10k, you just get £446 x5?

2) My understanding is Shepherds Friendly pay the tax, so providing I'm a basic rate tax payer, they'll be nothing to pay at the end of the term. However, does anybody know if I need to record the profit on my tax return, and if so, where?

Many thanks.

dunstonh

2) My understanding is Shepherds Friendly pay the tax, so providing I'm a basic rate tax payer, they'll be nothing to pay at the end of the term. However, does anybody know if I need to record the profit on my tax return, and if so, where?

Tax reduces the return but is paid internally unless the chargeable gain on maturity takes you into the higher rate band (where you would personally be liable fo the extra but only maturity). 

Due to the short term, this plan cannot be classed as  qualifying single premium endowment and instead is classified as a non-qualifying single premium endowment.  (you need 10 years to be classed as qualifying)