Long-term fixed savings and inerest ONLY payable at maturity?

Grunt_2

Anyone else looking for a long-term savings account that ONLY pays at maturity - other than NS&I? (i.e.  over 1 year)

I tried using the MSE site but every bank/BS (of course) pays on maturity - but also pays annually despite MSE saying the complete opposite - they state annually OR at maturity. Everyone I've checked states annually in there somewhere unless you want it monthly.

I tried Birmingham, Secure Trust, Tandem,  Cynergy and a few others.. 

I mentioned this to MSE over two weeks ago and they haven't corrected yet new offers appearing daily.

maisie_cat

My Oaknorth pays on maturity, I've had 1,2 & 3 years bonds and all paid on maturity

Albermarle

Grunt_2 said:

Anyone else looking for a long-term savings account that ONLY pays at maturity - other than NS&I? (i.e.  over 1 year)

I tried using the MSE site but every bank/BS (of course) pays on maturity - but also pays annually despite MSE saying the complete opposite - they state annually OR at maturity. Everyone I've checked states annually in there somewhere unless you want it monthly.

I tried Birmingham, Secure Trust, Tandem,  Cynergy and a few others.. 

I mentioned this to MSE over two weeks ago and they haven't corrected yet new offers appearing daily.

It is a grey area as many fixed term accounts add interest annually, even though it is not available for withdrawal.
In this case HMRC rules say the interest should be taxable when the interest is available to withdraw ( ie in maturity)
However in practice the providers send the interest info annually to HMRC and it is taxed annually.
A bit of a mess and much discussed on the forum.

EthicsGradient

For Secure Trust's 2 year bond, it says there is the option for interest to be credited to the bond, ie not available for withdrawal, so it shouldn't be taxed until maturity. 2 Year Fixed Rate Bond (securetrustbank.com) . For a 3 year account, Oxbury also credit to the bond (no choice about that), so again, tax only payable on maturity Personal 3 Year Bond Account 4.66% Fixed - Issue 10 | Oxbury | The Agricultural Bank .

Albermarle

EthicsGradient said:

For Secure Trust's 2 year bond, it says there is the option for interest to be credited to the bond, ie not available for withdrawal, so it shouldn't be taxed until maturity. 2 Year Fixed Rate Bond (securetrustbank.com) . For a 3 year account, Oxbury also credit to the bond (no choice about that), so again, tax only payable on maturity Personal 3 Year Bond Account 4.66% Fixed - Issue 10 | Oxbury | The Agricultural Bank .

If the interest is credited annually to the bond, it seems most providers inform HMRC annually, and they will tax it in that year, even if it is unavailable for withdrawal.
This is against their own rules, but is generally what happens in practice. There have been numerous threads about it and many have been on HMRC's own forum, only to receive contradictory answers.

masonic

Albermarle said:

EthicsGradient said:

For Secure Trust's 2 year bond, it says there is the option for interest to be credited to the bond, ie not available for withdrawal, so it shouldn't be taxed until maturity. 2 Year Fixed Rate Bond (securetrustbank.com) . For a 3 year account, Oxbury also credit to the bond (no choice about that), so again, tax only payable on maturity Personal 3 Year Bond Account 4.66% Fixed - Issue 10 | Oxbury | The Agricultural Bank .

If the interest is credited annually to the bond, it seems most providers inform HMRC annually, and they will tax it in that year, even if it is unavailable for withdrawal.
This is against their own rules, but is generally what happens in practice. There have been numerous threads about it and many have been on HMRC's own forum, only to receive contradictory answers.

If the OP submits a tax return, then this doesn't matter, they can declare it correctly. However, if they are not on self assessment, HMRC would need to be challenged on this default treatment. One forumite has taken up this challenge and results seemed to be encouraging. The last update I saw was that HMRC was asking for evidence that the interest was not available until maturity.

The whole issue can be sidestepped by finding an account that credits all interest at maturity. This is what I think the OP is looking for. Best examples at the moment are those via Raisin, e.g: Ziraat Bank 2 years @ 4.79%, UBL 3 years @ 4.63% (UBL's products can also be taken out direct). Non-Raisin options include SBI UK and Union Bank of India. Longer terms are also available. An important check is to ensure the AER < gross rate, otherwise interest is compounding over the term.