cb25
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Post by cb25 on Apr 19, 2021 9:08:29 GMT
I used the online chat function to ask how I get hold of a Tax Certificate for my 1-year Fixed Term Savings which has been paying monthly interest in the 2020/21 tax year (and end in the 2021/22 tax year).
Zopa's response: "All UK savings accounts now pay you gross interest, which means no tax is taken off. So, depending on your individual circumstances, you may need to declare your earnings to HRMC when it comes to paying tax. For Fixed Term Savings accounts, you only need to consider paying tax on your earnings in the financial year the term ends."
The bold section I've highlighted seems wrong to me as I received the interest in the 2020/21 tax year. Anybody got a view on it or had a different response from Zopa? (Edit: see later response from HMRC online chat that suggests Zopa were right all along)
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I responded, saying I thought they were wrong about not needing to declare interest until the end of term and again asked how I could get hold of a tax certificate.
Zopa's response: "Unfortunately, we do not produce tax certificates for your fixed term savings account before the fiscal year that you're savings account matures. However, if you login into your account you will be able to view an audit of the activities in your account including monthly interest payments."
Pathetic, Zopa Bank can't sum a few figures for customers. (Especially odd given they manage to do it for the more complex P2P case). Yes, I know I can do it quite easily, as I could with every other financial institution I deal with who manage to produce a Tax Certificate or annual summary of interest for their customers.
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Post by Deleted on Apr 19, 2021 9:44:31 GMT
I agree with you. Interest needs to be declared in the tax year it is received.
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coogaruk
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Post by coogaruk on Apr 19, 2021 11:13:24 GMT
I think the fact that you cannot access the interest until the account maturity date means you will probably be okay and on the right side of HMRC by not declaring it until then.
However, I cannot for the life of me understand why a provider would credit interest monthly on any account where it cannot be 'paid away' to an external account. If that were the case of course, then the monthly interest received would need to be declared to the taxman for the tax year in which it had been received.
NB. I am not a tax expert and the above is just my personal opinion (but probably accurate  )
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cb25
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Post by cb25 on Apr 19, 2021 15:00:59 GMT
I think the fact that you cannot access the interest until the account maturity date means you will probably be okay and on the right side of HMRC by not declaring it until then.
However, I cannot for the life of me understand why a provider would credit interest monthly on any account where it cannot be 'paid away' to an external account. If that were the case of course, then the monthly interest received would need to be declared to the taxman for the tax year in which it had been received.
NB. I am not a tax expert and the above is just my personal opinion (but probably accurate ) HMRC seem to agree with you 
I got the following answer from their online chat when I asked whether I should declare the interest in my 2020/21 return (when it was earned) or in my 2021/22 return (when it'll be paid out): "It should be included in the return of where you receive the actual amount, so it will likely be the 21/22 return that you will need to include it in"
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When I said in my first post "my 1-year Fixed Term Savings which has been paying monthly interest in the 2020/21 tax year", I was confusing interest accruing in the account which can not be withdrawn until the end of the 1-year term (in the 2021/22 tax year) with interest that can be withdrawn from the account.
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aju
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Post by aju on Apr 19, 2021 15:11:20 GMT
I think the fact that you cannot access the interest until the account maturity date means you will probably be okay and on the right side of HMRC by not declaring it until then.
However, I cannot for the life of me understand why a provider would credit interest monthly on any account where it cannot be 'paid away' to an external account. If that were the case of course, then the monthly interest received would need to be declared to the taxman for the tax year in which it had been received.
NB. I am not a tax expert and the above is just my personal opinion (but probably accurate ) I agree with you @cougaruk. I checked Mrs Aju's Zopa FT saving account faqs and it clearly states that one does not have access to the funds until the end of the term. In my view this means that she does not declare any interest until the period in which it is completed. ( She doesn't actually earn enough to pay tax anyway). For me this is just like all fixed term access accounts where one can only get out under special circumstances, we have a few of these but as you say most do not apply interest until the final date. In all these cases though the interest is not technically the savers until the funds and their returns are released to them. This of course is not the same as monthly interest on a bank account or other variable period products. The really interesting thing about Zopa and their numbers as in the P2P side too is their constant struggle with rounding issues. For Mrs AJU's case the monthly interest figures, all to 2dp, when added together and compared to the single current value seem to be at least 3-4p out. I queried this with Zopa as it's the first time i've seen this situation with any finance operation other than Zopa P2P. They simply replied that it was rounding issues that will be sorted out in the final interest value. Thing is though the rounding just seems to get worse month on month.
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aju
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Post by aju on Apr 19, 2021 15:15:34 GMT
I think the fact that you cannot access the interest until the account maturity date means you will probably be okay and on the right side of HMRC by not declaring it until then.
However, I cannot for the life of me understand why a provider would credit interest monthly on any account where it cannot be 'paid away' to an external account. If that were the case of course, then the monthly interest received would need to be declared to the taxman for the tax year in which it had been received.
NB. I am not a tax expert and the above is just my personal opinion (but probably accurate ) HMRC seem to agree with you
I got the following answer from their online chat when I asked whether I should declare the interest in my 2020/21 return (when it was earned) or in my 2021/22 return (when it'll be paid out): "It should be included in the return of where you receive the actual amount, so it will likely be the 21/22 return that you will need to include it in" Thanks cb25 that makes most sense, I think 
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cb25
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Post by cb25 on Apr 19, 2021 15:32:40 GMT
aju My Zopa bank term account also shows slight rounding errors. If I add the interest amounts shown to the original balance it's 2p less than the current balance.
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aju
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Post by aju on Apr 19, 2021 16:21:20 GMT
aju My Zopa bank term account also shows slight rounding errors. If I add the interest amounts shown to the original balance it's 2p less than the current balance. That's what i meant, if i wasn't spread sheeting these things so much i wouldn't notice. I think they suggested the balance figure they present is correct - we'll see when it completes i guess. At least Zopa is being open a bank would not normally work this way they would just present the interest at the end. I usually check all my accounts to make sure the interim and the final values add up. Never found it to be different in any of the accounts I've ever had until started with Zopa P2P and now Zopa bank too.
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coogaruk
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Post by coogaruk on Apr 19, 2021 17:51:29 GMT
For me this is just like all fixed term access accounts where one can only get out under special circumstances, we have a few of these but as you say most do not apply interest until the final date. In all these cases though the interest is not technically the savers until the funds and their returns are released to them. This of course is not the same as monthly interest on a bank account or other variable period products. My recently-opened 3yr Fixed-Rate account at Arbuthnot pays the interest (a whopping 1%!) annually and it has to be 'paid away' to an external account. Keeping it simple. No room for confusion. Keeping the taxman happy 
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