When to pay Tax with a 2 yr fixed saving account ?

Hamawa

I had a fixed saving account that started 2 years ago and matured in Oct 2025. HMRC is asking me to pay tax on it right now (tax year 24-25). Surely this is incorrect since the interests have only just matured ?

It is impossible to report or even know what HMRC is using for savings interest without spending hours on the phone. There is no online access (that I know) to any details. Last time I spent ages on the phone, it was to find out that Zopa had reported my ISA savings as well !

Does anyone have a better idea on how to deal with it more efficiently ?

masonic

Unfortunately it is not easy when you don't do self assessment. You would need to contact HMRC to tell them your interest was not accessible (assuming that's the case). They receive information from banks and building societies that includes all interest credited whether or not it is taxable in that year.

You could try writing to them, enclosing a copy of the product terms.

Albermarle

This has been the subject on many threads on the forum.
In simple terms-
HMRC rules say you should be taxed on when the interest becomes available. Typically for a two year fixed rate account this would be at the end of the two years.
However nearly all savings providers report annual interest added to the account to HMRC, without any info of whether it is available to the client or not.. So HMRC tax it annually ( assuming any tax is due) .
So effectively they break their own rules.

As said in the previous post, you can take up the matter with HMRC if you wish, or just leave it as it is.
For many people ( me included) it is actually better that it is taxed annually, so I just let sleeping dogs lie. 

mebu60

Albermarle said:

For many people ( me included) it is actually better that it is taxed annually, so I just let sleeping dogs lie. 

Ditto. Decided it was the least hassle.

DRS1

Have a look here and the link posted by @SevenUpPear8  

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