emlan

Thanks for that SAM Yes this is how I thought it was meant to work too but it appears that the Banks and Building Societies that notify the HMRC do not adhere to that rule. Since HMRC have told me that it cannot be amended, I have now paid the extra tax that has arisen from these notifications and I will make a contra correction when the interest is actually paid to me.

I am confused as to how to declare the tax on Fixed Rate Bonds where the interest is re-invested each year and only paid out (in full) at maturity. Should the annual tax return declare that year's interest re-invested in the bond or should it all be declared in 1 lump at the end of the term with zero declared in the initial year(s)

I have a few Fixed Rate Bonds that accrue interest over 2 and 3 years and whilst most of them transfer the interest automatically to my Bank Account monthly or annually, there are a couple that pay all the interest on maturity. When I fill in my Tax Return, for those Fixed Rate Bonds that pay interest on maturity I calculate using a figure of zero for the interest in the intervening years and include the whole of the interest in the year the Bond matures So I was surprised last week when I had a message from the HMRC showing that their interest record of my accounts was considerably higher than mine and, on phoning tem today, it turned out that for the Bonds only pay interest to me at the end of the term, the banks had provided HMRC with the "notional" annual interest and in turn HMRC used this in their taxation calculation HMRC have told me that this data from the banks cannot be amended and so I am planning to pay this higher amount for this year (but of course it will cancel out in future years) but I am still interested to know if this is the correct procedure