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Where Taxpayers and Advisers Meet

UK Tax on Interest from Savings

nirupa mayi
Posts:2
Joined:Fri Apr 21, 2017 8:20 am
UK Tax on Interest from Savings

Postby nirupa mayi » Tue Apr 25, 2017 11:43 am

I am very confused about tax on interest from savings. Is the interest from savings taxed separately or considered part of the Personal Tax Allowance? The total of my earnings and interest from savings combined is within my personal allowance. I also don't understand how fixed term interest bearing savings accounts are taxed..... I have 2 year/3 year and 5 year fixed term accounts which all pay interest at the end of the term. Am I supposed to declare interest earned every year, even though I'm not receiving it and the banks don't provide information about it?

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: UK Tax on Interest from Savings

Postby maths » Tue Apr 25, 2017 8:47 pm

The total of my earnings and interest from savings combined is within my personal allowance.
Then you have no income tax liability on either source of income.
I have 2 year/3 year and 5 year fixed term accounts which all pay interest at the end of the term. Am I supposed to declare interest earned every year, even though I'm not receiving it and the banks don't provide information about it?
Interest is taxable only when it "arises". If interest is credited at, say, the end of each year albeit not actually paid out until the end of the relevant term (eg 2 years) the income tax liability arises at the end of each year ie when the interest is credited to the account.

nirupa mayi
Posts:2
Joined:Fri Apr 21, 2017 8:20 am

Re: UK Tax on Interest from Savings

Postby nirupa mayi » Thu Apr 27, 2017 9:04 am

Thank you for your lovely clear explanation. My confusion is gone. Very very much appreciated.


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