Fixed Rate Bonds - confused by HMRC advice

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81996783#Comment_81996783

A sensible and pragmatic future approach, compared to taking time out of your life in arguing the toss with HMRC.

Monanore

@CatLover17

Would you mind telling me which provider gave HMRC the maturity total ?
As far as I know of the major institutions only NS&I do this.

Thanks.

By the way, as someone who's studied this, I'm sure your approach ( match the BBSI return ) - is correct.

DRS1

I have just noticed that in their annual interest summary Leeds Building Society have a box for each account labelled Withdrawals which tells you if it is an easy access account or one where you can't withdraw until maturity. They have been doing it for years but it only just occurred to me that maybe they do it because of this tax treatment issue.

refluxer

https://forums.moneysavingexpert.com/discussion/comment/81997197#Comment_81997197

Oxbury credit interest annually to their multi-year fixed rate bonds (the actual balance increases rather than the interest being a separate, 'expected' figure) but they don't report it annually to HMRC - they report the total interest earned during the duration of the fixed rate period in the tax year the bond matures.

Of all the banks and building societies I've used for multi-year fixed rate bonds, they are the only bank I've come across who do this.

CatLover17

@Monanore

"Would you mind telling me which provider gave HMRC the maturity total ?As far as I know of the major institutions only NS&I do this."

Sure -it was DF Capital.

fuzzzzy

I have had 18 month DF Capital fixes previously that paid out at maturity only.

I currently have a 2 year fix I took out in December 2025. I notice from my notes that it is set up for interest to be paid annually to my nominated account, which is unusual for me. When I checked my account online it said in the account details "interest on maturity/annually, please check key product info".

I suspect at opening the choice was to have interest paid at maturity, in which case they would only report to HMRC at maturity, or to have interest paid away annually, which is the option I obviously went for.

masonic

https://forums.moneysavingexpert.com/discussion/comment/81998572#Comment_81998572

I can't find any evidence in their T&Cs or historic rates to suggest interest is paid anything other than annually. None of their historic accounts had a higher gross rate than AER. Like you, all of my previous DF Capital accounts were paid away.

CatLover17

I have seen DF Capital offer both options on multiple year bonds

masonic

https://forums.moneysavingexpert.com/discussion/comment/81998865#Comment_81998865

Are you saying you've seen the option not to credit interest annually, but instead credit it all at maturity? If so, then that explains your experience. They've not done anything exceptional, as there are a number of providers that don't add any interest until maturity and can therefore declare it all in that year to HMRC. But in that case it is necessary to pay a higher gross rate than the stated AER to account for the lack of compound interest over the entire multi-year term.

fuzzzzy

https://forums.moneysavingexpert.com/discussion/comment/81998914#Comment_81998914

I think CatLover17 was just responding to Monanore's request for which provider was the one who gave HMRC a total at maturity only, as they weren't aware of any other than NS&I. I know there are other providers who do this but can't think who they are off the top of my head. Maybe it would be helpful to list them for Monanore.