Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Fri, 06 Jan 2023 13:42:39 GMT by DrJJ
Hi, Please can somebody answer my questions? 1) Do savings accounts of terms of more than 1 year, where you cannot access the money at all before maturity, get taxed each year, or only at the end of the final term's tax year? 2) What if such an account was one where you could, and do, take, say, the monthly or annual interest payment? I presume that payment would then have to be declared every tax year? 3) What if one could have taken an annual payment but chose to let the interest accumulate in the account instead? When then would tax have to be declared? Thanks in anticipation of any information.
Posted Wed, 11 Jan 2023 13:35:32 GMT by HMRC Admin 32

You would be taxed on the income from the savings at the end of the term. If the interest was accessible on a monthly basis, it would be taxable in the year it arises. If the interest is accessible, then it would be chargeable to tax in the year in which it arises. 

Thank you.
Posted Mon, 23 Jan 2023 14:55:31 GMT by DrJJ
Thank you, that should really help me. That answers my first two questions. The third answer is a little ambiguous, however. I presume by "accessible" you mean when I could actually get at it regardless of my choice of how to have it (i.e. how it could have been accessible). In other words if, for example, I chose to have all the interest at the end of the term of, say, 3 years, but could have had it monthly, then the tax would be declarable (in the tax year) at the end of the 3 years. Sorry for being so pedantic, but I need to be certain. (And sorry for taking so long to reply.)
Posted Wed, 25 Jan 2023 11:09:27 GMT by HMRC Admin 20
Hi DrJJ,

Interest is taxable in the year it is applied whether you access it or not.

Thank you.
Posted Wed, 25 Jan 2023 12:12:28 GMT by DrJJ
OK, I get the just. So, at least, that gives me some option, i.e. to choose the taxable year. And I assume from your previous answer that I can ignore annual "Certificates of Interest" on an account where I could not access the money anyway until the account matures? Thank you.
Posted Fri, 27 Jan 2023 13:23:19 GMT by HMRC Admin 32

Income tax is charged on the 'arising basis' in the UK. This means in the tax year in which you receive the interest. Where you have a fixed term account, where you cannot access the savings until the end of the agreed term, then the interest for the whoile term, would arise in the year, you were able to access it.

Thank you.
Posted Sun, 29 Jan 2023 10:08:07 GMT by DrJJ
Many thanks.

You must be signed in to post in this forum.