Dave Boyle

Thanks for the answer. If the society gives members a choice as to whether they are paid interest in cash, or whether the amount is reinvested into share capital to be reclaimed later, does the interest need to be declared as received (because the member had a choice) or not declared (because they didn't actually get the cash)?

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?