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Fixed Rate Bonds - confused by HMRC advice
Comments
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The problem with that is as per my last reply, even when asking them when they will report to HMRC, there can still be no clarity.
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You can know in advance. If the provider confirms that they will report the interest annually to HMRC and you do not self assess then you will be taxed annually. It may not be correct, but that is what will happen. If you want to be taxed at maturity because the interest is definitely not accessible until maturity then you will have to be prepared to argue with HMRC.
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I'm not saying I want to be taxed one way or another - I am simply saying I want to know which it is.
I do not know in advance - I've asked a provider and they have suggested that HMRC may not agree with how they consider tax should apply to their product, and given me a draft letter to have to argue the viewpoint of the provider against that of HMRC, after the fact, if that happens. That is not knowing in advance.
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I agree it should be clear and consistently followed. It can be if you opt only for accounts that either permit access, pay away interest, or credit it all at maturity. That's an unsatisfactory solution, but it is a solution.
Alternatively, complete a tax return and HMRC doesn't have to do any guesswork based on BBSI reporting.
I'm actually quite impressed if
HMRC(edit: a savings provider) has provided help in drafting a letter to correct their underlying assumptions.2 -
I'm not disagreeing with you that this situation is an absolute mess. I am just saying that if the provider confirms that they will report the interest annually to HMRC then that is how you can, rightly or wrongly, expect to be taxed.
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Except you started off by saying you had set up your savings accounts based on the view that tax would be charged at maturity. That was your planning. So clearly you did want that tax treatment not the annual tax charge. If you need to argue with HMRC to get it then argue with HMRC. The provider who gave you the draft letter was being very helpful.
For the future you should know that NS&I do report interest the way you would like - ie where it is inaccessible they report it all on maturity.
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Well the provider can't tell me what will actually happen, I'm certain HMRC can't tell me what will actually happen, and even if either did so I'd still have no confidence of the information being correct
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What are you talking about - in order to try and do some planning I read the explanation on this site (and elsewhere) regarding how it works, which said these bonds are taxable upon availability, at maturity. That was my planning - not my preference. Either way would have been absolutely fine, if it was clear, which it clearly is not.
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It seems realistic to assume that providers will comply with their BBSI obligations and submit all interest credited during the year, even if inaccessible - IIRC NS&I are the outlier here. Obviously there's an argument that it shouldn't be necessary to make assumptions or go around chasing providers and/or HMRC though…
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Are you saying you planned to do something which would lead you to be taxed in a way you didn't want?
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