Nationwide Members bond 5% 18 months up to £10K

masonic

Growingold said:

Kim_13 said:

zombie404 said:

So can some one just clarify for my fuzzy brain.

Is the interest paid at 12 months then at 18 month end of term

Or is ALL interest paid after 18 month maturity date

12 months and then at the end of term. 

In practical terms it makes no difference (other than some compounding) as it will all be taxable in the same tax year.  

Reading this on their Member Exclusive Bond page. Just something to be aware of if in future the interest payments straddle 2 different tax years. 
Nationwide has a legal obligation to report interest to HMRC in the tax year that it is paid into your account, which may differ to the tax year in which the interest is deemed to arise and is taxable.

It's good to see a provider that is on the ball with this and pointing it out.

True of all such accounts interest is credited in a different tax year to being accessible.

Stargunner

MaterialGirl* said:

So, as a higher tax payer, if you’d pay in 10k, you would have to pay tax on the interest over £500 next year? Therefore tax on around £250?  

Wouldn’t it be better to just pay in £5000 only?

That would mean with interest on £5000 plus hopefully, another £100 fairer share next year, the total interest stays under £500 threshold? 

I would think that most higher rate tax payers already have money in other savings accounts, that would be contributing to their £500 threshold. Probably Regular Savers that pay much higher interest.

Pat38493

masonic said:

Growingold said:

Kim_13 said:

zombie404 said:

So can some one just clarify for my fuzzy brain.

Is the interest paid at 12 months then at 18 month end of term

Or is ALL interest paid after 18 month maturity date

12 months and then at the end of term. 

In practical terms it makes no difference (other than some compounding) as it will all be taxable in the same tax year.  

Reading this on their Member Exclusive Bond page. Just something to be aware of if in future the interest payments straddle 2 different tax years. 
Nationwide has a legal obligation to report interest to HMRC in the tax year that it is paid into your account, which may differ to the tax year in which the interest is deemed to arise and is taxable.

It's good to see a provider that is on the ball with this and pointing it out.

True of all such accounts interest is credited in a different tax year to being accessible.

What does this mean?  I always thought that such products, the interest payment counts as savings interest at the date you received it?

Are you saying that we have to declare the interest for the 25/26 tax year in that year even though it will have not been paid yet?  If so that's news to me and is that because this is a "bond" rather than a savings account?

If this is the case will Nationwide inform us about the exact amount we need to declare in each tax year?

subjecttocontract

I declare it if the interest has been credited to the account which, in the case of Nationwide, it has been.
You only need to log into the account to see how much has been credited.

Pat38493

subjecttocontract said:

I declare it if the interest has been credited to the account which, in the case of Nationwide, it has been.
You only need to log into the account to see how much has been credited.

OK but in the case of this bond, the interest will be credited presumably around June 2026 and then December 2026 - both in the same tax year anyway.

masonic

Pat38493 said:

masonic said:

Growingold said:

Kim_13 said:

zombie404 said:

So can some one just clarify for my fuzzy brain.

Is the interest paid at 12 months then at 18 month end of term

Or is ALL interest paid after 18 month maturity date

12 months and then at the end of term. 

In practical terms it makes no difference (other than some compounding) as it will all be taxable in the same tax year.  

Reading this on their Member Exclusive Bond page. Just something to be aware of if in future the interest payments straddle 2 different tax years. 
Nationwide has a legal obligation to report interest to HMRC in the tax year that it is paid into your account, which may differ to the tax year in which the interest is deemed to arise and is taxable.

It's good to see a provider that is on the ball with this and pointing it out.

True of all such accounts interest is credited in a different tax year to being accessible.

What does this mean?  I always thought that such products, the interest payment counts as savings interest at the date you received it?
Are you saying that we have to declare the interest for the 25/26 tax year in that year even though it will have not been paid yet?  If so that's news to me and is that because this is a "bond" rather than a savings account?
If this is the case will Nationwide inform us about the exact amount we need to declare in each tax year?

You will need to declare all of the interest in the 2026/27 tax year.

If it were a 5 year fix, then you'd have to declare all 5 years interest in the 2030/31 tax year. This is because interest arises for tax in the first tax year it is accessible, which isn't necessarily the tax year in which it is credited to the account. This only applies to accounts where interest is compounded and cannot be accessed, even with a penalty.

Kim_13

masonic said:

Pat38493 said:

masonic said:

Growingold said:

Kim_13 said:

zombie404 said:

So can some one just clarify for my fuzzy brain.

Is the interest paid at 12 months then at 18 month end of term

Or is ALL interest paid after 18 month maturity date

12 months and then at the end of term. 

In practical terms it makes no difference (other than some compounding) as it will all be taxable in the same tax year.  

Reading this on their Member Exclusive Bond page. Just something to be aware of if in future the interest payments straddle 2 different tax years. 
Nationwide has a legal obligation to report interest to HMRC in the tax year that it is paid into your account, which may differ to the tax year in which the interest is deemed to arise and is taxable.

It's good to see a provider that is on the ball with this and pointing it out.

True of all such accounts interest is credited in a different tax year to being accessible.

What does this mean?  I always thought that such products, the interest payment counts as savings interest at the date you received it?
Are you saying that we have to declare the interest for the 25/26 tax year in that year even though it will have not been paid yet?  If so that's news to me and is that because this is a "bond" rather than a savings account?
If this is the case will Nationwide inform us about the exact amount we need to declare in each tax year?

You will need to declare all of the interest in the 2026/27 tax year.

If it were a 5 year fix, then you'd have to declare all 5 years interest in the 2030/31 tax year. This is because interest arises for tax in the first tax year it is accessible, which isn't necessarily the tax year in which it is credited to the account. This only applies to accounts where interest is compounded and cannot be accessed, even with a penalty.

That is strictly true, and if that is to a taxpayers advantage, it seems to be possible to contact HMRC and explain that £xxx.xx credited and reported to them by y institution on (date) is not accessible and have it taxed later (when it is accessible.) If not, it’s best to just go along with the reporting and pay the tax each year. The current system is a mess when it comes to fixed rate bonds - there have been many posts of forumites being told different things when contacting HMRC about it.

The Nationwide 18 month bonds haven’t straddled 2 tax years yet so when interest is credited in May/June/July, the tax year will still be ongoing 6 months later when the funds are accessible (so no tax needs to be paid before the funds are released to pay it with.) Until the following tax year, HMRC won’t even know what the total due is. 

If there was an option to have interest paid away which wasn’t taken up, it’s still counted as accessible. 

aroominyork

zombie404 said:

So can some one just clarify for my fuzzy brain.

Is the interest paid at 12 months then at 18 month end of term

Or is ALL interest paid after 18 month maturity date

Interest at 12 months seems to be credited to the bond, not to a separate account (eg not to a Nationwide current account), so it is not accessible - and hence not taxable - until the bond matures. I say this because the site says the balance at end of term on £1000 would be £1076.25. That would be £50 interest on £1000 for the first 12 months, then 2.5% on £1050 for the remaining six months.

friolento

aroominyork said:

zombie404 said:

So can some one just clarify for my fuzzy brain.

Is the interest paid at 12 months then at 18 month end of term

Or is ALL interest paid after 18 month maturity date

Interest at 12 months seems to be credited to the bond, not to a separate account (eg not to a Nationwide current account), so it is not accessible - and hence not taxable - until the bond matures. I say this because the site says the balance at end of term on £1000 would be £1076.25. That would be £50 interest on £1000 for the first 12 months, then 2.5% on £1050 for the remaining six months.

Best to work with the Nationwide info rather than trying to guess

That said, it is quite likely that both interest payments will occur in the same tax year, i.e. 2026-27, for everybody, anyway.

poppystar

Maybe that’s why Nationwide have offered this and the previous 18month bond in May/June? That way both interest payments will fall in the same tax year, so no confusion.