Tax on interest on long term fixed rate bond

Would it be possible to abstain from declaring interest annually for bonds that I've opened in the last year and so haven't yet paid tax on, but continue to pay annually for those that are getting near maturity? It sounds as though I won't be able to amend all of them anyway as several start too early. I'm happy to claim back those with NS&I but all the others seem too uncertain. I've phoned the providers that I have older bonds with but none of them have been able to help me. They just say it's up to me to declare interest.

Hi Angela Shaw,
Income tax is applied using the arising basis, that is income is taxed in the year in which it arises.
Where your bonds generate interest every year, which you have access to, you must declare it in the tax year it arises.
If the bonds cannot be accessed until maturity, then only when they mature, can the be declared for tax purposes.
Thank you. 

Yes I know that, and am happy to comply with that from now on. The difficulty is changing my tax returns in retrospect for those I'm half way through, when there's a limit to how far you can go back to make amendments. I'm asking whether I can carry on with those bonds that I've been paying tax on for years to simplify matters. It won't make any difference to my tax bracket which I do as I'm already a higher rate tax payer. If the guidance has been out since 2016, I (and many others) must have done it incorrectly in the past with no complaints made. It seems to me from some comments from others on this forum that some providers aren't following the guidance and are telling people to declare interest annually when they don't have access to it. If they are wrong, should we, as mere customers, do as they say, or ignore their advice and follow the SAIM guidance? The area that seems to be causing confusion is where there is an option to have interest paid into the bond or paid into a nominated account. It seems to me that if you choose the former you should pay at maturity. Is that correct? If we should follow the SAIM guidance and ignore the possibly incorrect providers it would make life simpler and we don't need to ask each provider what to do in the future.

Hi Angela Shaw,
You should be following the SAIM guidance.
Thank you.

Hi. Can anyone help with a query? I have a fixed rate account with interest paid into the same account. I currently work and pay tax. However, I am due to take early retirement in a few years ...and will have no income at all for a few years due to my age. The bond is due to mature once I have left work. Will I still pay tax on the jnterest then when it matures and I have no income or will tax be taken for the period when I was working and the account was paying interest? Thanks

Hi
HMRC cannot comment on future events, however based on current guidance, if you have no other income and the interest remains below your personal allowances, no tax will be due.

Help required on this please. I have taken out 2 fixed term savings / bond accounts 4 year and 5 year. Accout 1. I cannot access funds or interest until end of the term so I assume tax is paid at the end after 4 years. Is this correct? Account 2. This has no access to the initial money but has the option to allow access of interest after each year or to compound until the end of the 5 year term. I have selected compounded but it looks like this can be changed. When is taxed paid on this please is this yearly or again at the end of the term with the compounded option being selected. Ideally I want to use the interest as income in 4 and 5 years time ( i will have no other income) after i have finished work and delay me dipping into my pension. Thanks for any help

Hi,
Savings Accounts that do not allow access to the capital or interest until the end of the term, are only liable to tax on the interest, when the term ends. Savings account that allow access to the capital at any time, are taxable on the interest in each tax year the interest arises.
Thank you.

There's some good stuff on here, particularly from rl11 and Angela Shaw, but there's still a bit of uncertainty in the responses. I have a 2 year FRB with KRBS (with no early closure) that matures in October 25/26, yet they have just sent me a COI for 23/24 showing a couple of grand interest that has been added to the principal sum. The fact that they've done this obviousley means they've notified HMRC, but I read on here that tax on the interest isn't payable until the maturity tax year. Is this reportable or what? How do I know what KRBS (or any other provider for that matter) has agreed with HMRC regards COIs? Do I just assume that because I've been sent a COI I therefore need to stick it on my tax return for 23/24, or do I risk the wrath of HMRC and wait until 25/26 to declare? And if I do wait until 25/26 before declaring, do I have to add up the COIs for this account for all 3 COIs that I will have received (23/24, 24/25 and 25/26)...?

Hi HMRC, Please tell me where to fill in the interest gained from US bonds in SA100, thanks.

I have an issue which falls between the two poles you have identified of the investor variously being able or unable to have interest paid. A registered society pays interest on its capital. Many societies pay interest in the form of new shares, so the investor never gets the opportunity to choose whether to take direct payment or reinvest - the decision is made by the society at the point of investment. The ability to be paid the value of the interest depends on when the investor makes a withdrawal request to the society. Crucially, a society may reject a withdrawal request; this might be because they do not believe allowing any withdrawal is prudent, or it may be that they have allocated a certain amount of capital for withdrawal on a first-come, first served basis, and an investor may simply make a request too late in this process by which time all the available capital has already been allocated. So, although an investor may request to be paid the value of their payment, whether the funds are actually paid is in the hands of the board of the society, who may reject it. My question then is - when would the interest be declared for tax purposes? In the tax year in which it is credited to the investor, but not received, or the year it is actually received by them?

Hi, Can I clarify: If, on application, a fixed term savings account (non breakable) has the option to either a)capitilise interest or b) to pay interest away to an accessible account, whether the interest earnt and reported to me by the bank each year is taxable for that year or whether it all becomes taxable only at maturity irrespective of the choice I make? Previous replies from HMRC appear to give contradictory advice on this question of choice. TIA

@Taxpayer63 Banks are required to provide customers with a certificate of interest (that details the amount of interest paid on a savings account) irrespective of whether the interest is taxable in that tax year or not (also irrespective of whether the interest is paid away or capitalised). Banks also supply HMRC an annual BBSI (Banks and Building Societies Interest) report that details the amount of interest paid to each of their customers in the previous tax year. Again this is irrespective of whether that interest is taxable or not. In summary banks tell both customers and HMRC the same thing, whether or not the interest is taxable is a matter between HMRC and the customer.....and so the confusion begins :-) !

Hi Taxpayer63

Interest is taxable in the tax year in which it arises.  Accounts where the capital and interest cannot be accessed until maturity, are only taxable in the tax year, when the account matures.  
If the account can be accessed at any time, then interst is taxable in the tax year it arises.

Thank you

Hi Lisa,

Foreign interest is declared on SA106 (foreign) or in the foreign section of the online tax return, where you can claim a foreign tax credit for any foreign tax payable.

Self Assessment: Foreign (SA106)

Thank you.

Hi Dave Boyle,
If the society automatically reinvest the shares then it wil be on maturity and when you can physically access the interest that will determine the tax year it is classed as income.
Thank you.

Hi callmecurious,
If paid back into the same account and not accessible until maturity then it is the year it matures, if paid to another accessible account it is yearly.
Thank you.

Hi HMRC Admin 5. I get what you say but if your provider issues COIs (showing earned interest, not zero) on a multi year FR account that has NO early access (like has just happened to me from KRBS - then what? Do I keep the COIs until the maturity year, add them all up and put that value down on my SA tax return, or just stick it down annually as I get them? This is the specific question I need answering.

Hi Taxpayer63,
You will only declare it on maturity and it is the total interest over the period that is declared in the maturity year see:-
Savings and Investment Manual SAIM2400 - Interest: taxation of interest: the tax charge
Thank you.

Atom bank fixed 3 year no access. Interest paid annually but with the option of paying into either a separate account or compounded into the same fix. If I CHOOSE to have the interest paid into the same fixed account but it also gives me the option of switching at any time to have the interest paid into a separate accessible account then which tax rules apply please? Tax paid annually or on maturitu