When is tax to be paid?

Gromit1234

Hi, I have several savings accounts opened in April and May 2024. 

One of them pays monthly interest into my bank account, I know when to declare that to HMRC.

Another shows interest accrued monthly on the statement but the interest is only available when the account matures. The last doesn't show any interest that's accrued and interest is only available when the account matures. So on the second and third accounts when is tax payable? I read somewhere that "interest is counted in the tax year you can access it"

Dazed_and_C0nfused

Do you file a tax return or leave it to HMRC to work out?

wmb194

Gromit1234 said:

Hi, I have several savings accounts opened in April and May 2024. 

One of them pays monthly interest into my bank account, I know when to declare that to HMRC.

Another shows interest accrued monthly on the statement but the interest is only available when the account matures. The last doesn't show any interest that's accrued and interest is only available when the account matures. So on the second and third accounts when is tax payable? I read somewhere that "interest is counted in the tax year you can access it"

Correct, it arises for tax purposes when it's accessible and you're not taxed on accrued interest. 

The snag is that if interest is credited to your account in a tax year it seems all providers except NS&I will report it to HMRC and HMRC will tax you accordingly unless you intervene to tell it it wasn't accessible. If the interest on your accounts is only credited on maturity this shouldn't be an issue.

Ocelot

wmb194 said:

Gromit1234 said:

Hi, I have several savings accounts opened in April and May 2024. 

One of them pays monthly interest into my bank account, I know when to declare that to HMRC.

Another shows interest accrued monthly on the statement but the interest is only available when the account matures. The last doesn't show any interest that's accrued and interest is only available when the account matures. So on the second and third accounts when is tax payable? I read somewhere that "interest is counted in the tax year you can access it"

Correct, it arises for tax purposes when it's accessible and you're not taxed on accrued interest. 

The snag is that if interest is credited to your account in a tax year it seems all providers except NS&I will report it to HMRC and HMRC will tax you accordingly unless you intervene to tell it it wasn't accessible. If the interest on your accounts is only credited on maturity this shouldn't be an issue.

Even when you tell them it isn't accessible they still ignore you and tax it in advance anyway!

Sarahspangles

wmb194 said:

Gromit1234 said:

Hi, I have several savings accounts opened in April and May 2024. 

One of them pays monthly interest into my bank account, I know when to declare that to HMRC.

Another shows interest accrued monthly on the statement but the interest is only available when the account matures. The last doesn't show any interest that's accrued and interest is only available when the account matures. So on the second and third accounts when is tax payable? I read somewhere that "interest is counted in the tax year you can access it"

Correct, it arises for tax purposes when it's accessible and you're not taxed on accrued interest. 

The snag is that if interest is credited to your account in a tax year it seems all providers except NS&I will report it to HMRC and HMRC will tax you accordingly unless you intervene to tell it it wasn't accessible. If the interest on your accounts is only credited on maturity this shouldn't be an issue.

That's been our experience, but for many people it's in their interest (no pun intended) as they may take a higher tax hit on maturity than if they spread the income over multiple years. In our case, we'd choreographed maturity of fixed bonds so they were spread over multiple years.

Gromit1234

Thanks for the information.