Fixed year bond that only pays interest at Maturity

Apollo22

I want to move my savings into a 3 year bond. At that point I expect to retire. However, my preference is to have the interest at maturity,not annually. Is there such an account. Everyone I have called and tried all say the interest is paid annually.
thanks

FrugaiMacDugal

Some accounts allow interest to be taken out annually if requested.

In your scenario, interest will be paid annually, but added to your account, thus compounding, each year.

ColdIron

A selection here

lr1277

Be careful about that. I am sure I have seen 1 or 2 threads on here where people have fixed term accounts paying the interest at the end of the term, but HMRC assume you earn the interest yearly and tax you as such. Basically the complaint was that people were paying taxes on money they did not have in their control.

I wouldn't know what search terms to use to find those particular threads. But I think I have seen at least one such thread in the last 6 months, either on this board or the Cutting Tax board.

Or you could ask HMRC what their stance is on fixed term products paying interest at the end of the term.

wmb194

lr1277 said:

Be careful about that. I am sure I have seen 1 or 2 threads on here where people have fixed term accounts paying the interest at the end of the term, but HMRC assume you earn the interest yearly and tax you as such. Basically the complaint was that people were paying taxes on money they did not have in their control.

I wouldn't know what search terms to use to find those particular threads. But I think I have seen at least one such thread in the last 6 months, either on this board or the Cutting Tax board.

Or you could ask HMRC what their stance is on fixed term products paying interest at the end of the term.

I wouldn’t waste my time talking to HMRC.

 The safest option is probably NS&I, that seems to report correctly only at the end of the term, but of course it rarely has the most competitive rates.

Another option might be the capital gains tax free, low coupon gilt route.

Apollo22

thanks all will check out NSI

Ocelot

lr1277 said:

Be careful about that. I am sure I have seen 1 or 2 threads on here where people have fixed term accounts paying the interest at the end of the term, but HMRC assume you earn the interest yearly and tax you as such. Basically the complaint was that people were paying taxes on money they did not have in their control.

I wouldn't know what search terms to use to find those particular threads. But I think I have seen at least one such thread in the last 6 months, either on this board or the Cutting Tax board.

Or you could ask HMRC what their stance is on fixed term products paying interest at the end of the term.

I'm one of them. I wrote to them 2 weeks ago (no reply) pointing this out.

Albermarle

lr1277 said:

Be careful about that. I am sure I have seen 1 or 2 threads on here by where people have fixed term accounts paying the interest at the end of the term, but HMRC assume you earn the interest yearly and tax you as such. Basically the complaint was that people were paying taxes on money they did not have in their control.

I wouldn't know what search terms to use to find those particular threads. But I think I have seen at least one such thread in the last 6 months, either on this board or the Cutting Tax board.

Or you could ask HMRC what their stance is on fixed term products paying interest at the end of the term.

The issue is that most savings providers report  the interest annually to HMRC, even for fix term products where the interest is not available to the client until the end of the term.
HMRC then tax the interest annually, as they do not know what the terms are of the account that the interest is being reported for.

VNX

Oak north bank 

Ocelot

Ocelot said:

lr1277 said:

Be careful about that. I am sure I have seen 1 or 2 threads on here where people have fixed term accounts paying the interest at the end of the term, but HMRC assume you earn the interest yearly and tax you as such. Basically the complaint was that people were paying taxes on money they did not have in their control.

I wouldn't know what search terms to use to find those particular threads. But I think I have seen at least one such thread in the last 6 months, either on this board or the Cutting Tax board.

Or you could ask HMRC what their stance is on fixed term products paying interest at the end of the term.

I'm one of them. I wrote to them 2 weeks ago (no reply) pointing this out.

I got another tax notification letter yesterday, showing they have completely ignored my letter telling them I don't have access to the interest until end of 2025/26.

Apollo22

I think its a minefield and with me currently working for a few years, I dont want the interest, so NSI it is unfortunately. Basically I am gambling that I will not be working in a few years.