Tax treatment monthly v annual interest

[staffordian]

Can I please check if my understanding is correct?

If I invest in a fixed rate one year savings account, I can choose whether the interest is added monthly or annually (i.e. at maturity).

I assume if it is added monthly then income received before 6 April 2024 would be taxed in the 23-24 year, whereas if I elected for annual interest, then it would all count as 24-25 income.

Is this correct?

Thanks for any confirmation, or otherwise.

[pje16]

Correct, interest is taxed according to the date of receipt

[nmdhqbc]

I was surprised listening to the Martin Lewis podcast. The latest one I think or maybe week before. I'd double check if I was you but I think he said it's when the money is withdrawable. So if the monthly interest is paid into the fixed rate account I believe it would go I to the tax year the fixed rate ends. But if paid out to a current account the day it is paid counts. Again, I was only half listening so take what I say with a pinch of salt.

[Lootman]

I simply go by the amount stated in the consolidated tax certificate issued by the bank.

[staffordian]

Thanks for what I think is confirmation

I simply go by the amount stated in the consolidated tax certificate issued by the bank.

I'd like to know now as it will influence how much I invest and which interest option I select.

It will suit me to have most of the income this tax year rather than next, so this is why I'm leaning towards monthly payment (though I would leave it invested, not withdraw it, if that makes a difference) in the hope it counts as this year's income.

[pje16]

please see my reply, the one under your OP

[staffordian]

please see my reply, the one under your OP

Thanks, and that does concur with my understanding.

The only thing I was uncertain of, and I didn't make it clear in the OP, was whether the fact that if I have it paid monthly but I cannot access it as it is a no access account, this makes a difference.

[nmdhqbc]

please see my reply, the one under your OP

Thanks, and that does concur with my understanding.

The only thing I was uncertain of, and I didn't make it clear in the OP, was whether the fact that if I have it paid monthly but I cannot access it as it is a no access account, this makes a difference.

Did you not see my reply? Maybe give the podcast a listen

[staffordian]

Thanks, and that does concur with my understanding.

The only thing I was uncertain of, and I didn't make it clear in the OP, was whether the fact that if I have it paid monthly but I cannot access it as it is a no access account, this makes a difference.

Did you not see my reply? Maybe give the podcast a listen

I did, thanks, and will double check, but as ever with advice, it sometimes conflicts and confuses .

[dealtn]

please see my reply, the one under your OP

Yes please see it and then remember it isn't always true.

If the interest is "received" into an account but isn't accessible, which is often the case with monthly compounding fixed term bonds, then the applicable date is when it is accessible, which is often the anniversary of the investment, or the maturity of the investment.

I can't find the relevant help page or legislation but the following forum reply confirms

https://community.hmrc.gov.uk/customerforums/pt/f58be9bc-b471-ed11-97b0-00155d9c7b3d

[staffordian]

please see my reply, the one under your OP

Yes please see it and then remember it isn't always true.

If the interest is "received" into an account but isn't accessible, which is often the case with monthly compounding fixed term bonds, then the applicable date is when it is accessible, which is often the anniversary of the investment, or the maturity of the investment.

I can't find the relevant help page or legislation but the following forum reply confirms

https://community.hmrc.gov.uk/customerforums/pt/f58be9bc-b471-ed11-97b0-00155d9c7b3d

Many thanks. Will read that.

But before I do, it occurs to me that I have the option with this account to either have the interest retained or paid away. I wonder if the fact that I can receive it but choose not to is relevant...