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Posted Wed, 21 Feb 2024 12:30:00 GMT by
I was hoping someone could clarify about when and how tax is payable on fixed rate bonds. I have a number of fixed rate bonds for different terms - 1 year, 2 year, 3 year and 5 year. I have opted to have the interest paid annually into the bonds. I will not have access to any of the money in the bonds (including the interest) until they mature. I assume as I have no access to the money or interest in each bond, tax is only payable upon maturity of each? Can I also clarify how tax is deducted. I understand that banks and building societies now pay interest gross. Are all banks and building societies required to communicate any interest earned to HRMC automatically? Some have said they do and some have said they don’t, which is extremely unhelpful. Do I need to file a self assessment tax return for the ones that don’t? Or will HMRC just change my tax code to reflect how much tax I owe over my PSA? Very confused over this and none of the banks seem to know the answer or how any of it works. Also, if I have a bond maturing in, say, March 24 (23/24 tax year) and another maturing in July 24 (24/25 tax year), would I get my £1000 personal savings allowance for each bond considering I would be paying tax on my interest earned in 2 separate tax years? Many thanks!
Posted Wed, 21 Feb 2024 14:23:16 GMT by HMRC Admin 8
As you cannot access the interest until it matures, you declare it in the year of maturity.
UK banks and building societies notify HMRC of interest received and you would only be required to submit a tax return if your total interest (excluding ISA) was over £10k. you are entitled to the savings allowance each tax year. guidance is available:
Thank you.
Posted Wed, 21 Feb 2024 21:40:45 GMT by
Hi there, Thanks for the reply. So if the interest per tax year is under £10k, will HMRC just change my tax code to reflect the amount of tax I owe on my savings per tax year? Is there anything that will be sent to me from HMRC or my bank/building society to communicate exactly how much tax I owe on my savings? Many thanks!
Posted Wed, 28 Feb 2024 07:37:22 GMT by _viator
Can anyone answer the questions above? Thanks!
Posted Thu, 29 Feb 2024 09:52:49 GMT by HMRC Admin 25
Hi _viator,
Please refer to guidance here:
SAIM2440 - Interest: taxation of interest: when interest arises
Thank you. 

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