Kaupthing don't deduct tax?

whu

KE have always taken off the 20% interest automatically on my account

funkyhitman

Hmm well I guess it's not a huge deal because I could just declare the interest on my tax return but i'd rather it was done automatically so I don't have to do that cos i've never filled in a tax return and would rather keep it as simple as possible!

Am I correct in saying that the interest earned over a year, tax free, and then deducted after a year will be the same as tax deducted monthly?

YorkshireBoy

funkyhitman wrote: »

Am I correct in saying that the interest earned over a year, tax free, and then deducted after a year will be the same as tax deducted monthly?

No, it will be (ever so) slightly more for annual interest. This is because if the interest is paid and taxed monthly you have less net interest to compound going forward to the next month.

funkyhitman

YorkshireBoy wrote: »

No, it will be (ever so) slightly less. This is because if the interest is taxed monthly you have less net interest to compound going forward to the next month.

So the AER of 6.5% is based on monthly tax deduction? So i'm actually better off not getting taxed monthly and declaring it at the end so that I will get more than 6.5%...if thats allowed? How much less are we talking? Pennies?

Geoffo_M

I've just been credited my first interest and it appears to be net of income tax:-

"Cr Int to 31st May £11-97
Net of £2-99 TDSI."

I've no idea what TDSI stands for

Stompa

Geoffo_M wrote: »

I've no idea what TDSI stands for

I've always assumed it's something like "Tax Deducted at Source" - though I haven't figured out what the 'I' means (maybe Income?)!

jem16

Geoffo_M wrote: »

I've no idea what TDSI stands for

Tax Deduction Scheme for Interest


http://www.hmrc.gov.uk/tdsi/faqs.htm

Mikeyorks

The_Fiddler wrote: »

Where do you get the idea that gross interest is paid on £50K+ ?

Standard facility with a lot of UK based Banks so ... as earlier response ... I looked at their T&Cs .... to find they offer it also!

roddydogs wrote:

so how do you pay the tax? or do you just keep quiet and hope nobody notices?

Little prospect of no one noticing. All interest bearing accounts are reported directly to HMRC by the Institutions .... in particular those with gross interest. You can either declare it on an SA Return or try and opt for the less onerous P810 procedure if you're on PAYE. Same as you have to do with some NS&I products that are taxable - but paid gross.

The_Fiddler_2

Which banks and building societies does this apply to - which pay gross interest at £50K+ savings?

funkyhitman

Hi folks, I have to apologise cos I have noticed (due to the help of above posters) that my statement does infact state 'net of TDSI'. Tax has been deducted so I obviously worked it out wrong. I was thrown off by my figure of £1.76 before tax being the same as KE's £1.76 net of 44p TDSI. I have since worked it out more precisely, albeit 20p out, and have decided that the tax is correct.

If it wasn't for the interesting and helpful posts in this thread I wouldn't have realised it was correct so thank you at least for aiding me in realising my own stupidity :rolleyes:. It all comes down to my rubbish maths skills. I wish I were better!