Account closure penalty

[Geoff Smith]

Last year I closed a building society account. In July 2007 interest of around £5,000 was credited with £1,000 deducted for tax.

When I closed the account in August 2007, a negative interest amount was put on the account (around £500) but no mention of tax. This was a penalty charge for closing the account early.

I am now completing my tax return - do I enter £5,000 interest or just the £4,500?

Help would be appreciated! Thanks.

(If the tax is due on £5,000 I wonder if the account was closed a couple of months earlier and the closing interest was reduced to reflect the penalty, this would have been to my benefit...)

[Simon Sweetman]

I fear that the penalty for early closure is quite separate from the interest - it is seen as a capital payment. So the £5000 goes on the return.