Fixed Rate Bonds - confused by HMRC advice

DRS1

The change in tax rate on savings interest could also get a look in here. Being taxed annually may get you some interest taxed at the lower current rate versus all of it being taxed at the future higher rate.

intalex

Another argument for annual taxation could be that the 1st year interest is firmly the taxpayer's "property" when credited and capitalised, as from thereon that interest also earns (compound) interest in subsequent years, and so the taxpayer immediately starts deriving benefit from it. The same for each subsequent year.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81967638#Comment_81967638

That would be an interesting argument to level at HMRC in court. See Dunmore v McGowan https://vlex.co.uk/vid/dunmore-v-mcgowan-hm-802925449 from 1978 for a similar case, with the outcome described here: https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2400 .

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81967477#Comment_81967477

Interesting. I read the section on timely reporting with amusement - I don't know if BBSI requests to B&BSs have a deadline attached, the ones to joe public don't seem to so if there's some information somewhere else that says you have to respond within X it's not made clear (combined with requests for information about tax years not yet complete..) Improvements as targeted by that article would not go amiss.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81967648#Comment_81967648

Not completely sure if it's what you're referring to but the current BBSI model requires the institutions to submit by 30 June:

https://www.gov.uk/guidance/bank-and-building-society-interest-returns#the-returns-cycle

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81967792#Comment_81967792

And there are penalties for those that don't meet the deadline.

Although they don't really seem set as the level to make the likes of Lloyds quake in their boots!

https://www.gov.uk/guidance/bank-and-building-society-interest-returns#penalties

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81966551#Comment_81966551

I don't think you have understood it corrctly.

That would mean you have a total liability of £5.6k, of which less than 54% was deducted at source.

So I would expect to have POA (£1.3k each POA).

But the explanation at the end of your Self Assessment calculation will tell you this before even submitting the return. I wouldn't be surprised if a HMRC call centre adviser was clueless about this (prior to you submitting the return at least).

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81967792#Comment_81967792

Yeah that's the one - OK good there's a deadline for institutions. I've had BBSI requests to me as an individual in October, relating to the tax year only part way through, with no information on when they needed the return by.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81967928#Comment_81967928

My understanding is that BBSI specifically relates to the returns made by banks and building societies to HMRC, rather than requests from HMRC to individuals? I have seen mentions on here of taxpayers being asked to substantiate projections of current year interest when they're looking to get tax codes adjusted, is that the sort of thing you mean?

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81968146#Comment_81968146

Yes I guess so, it's a letter titled Bank and Building Society Interest (BBSI) asking for a breakdown of interest per account.