Clinet has money deposited in Fixed rate deposit for 2 years. Capital+interest to be paid upon maturity.
My question is: is interest payable taxable in the year even though it never credited the client account.
thanks
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From memory it's taxable on maturity, or on sale if the bond is sold earlier (if it's in the form of a security), or when credited to the account (if it's held in the form of a bank account).
Is it a deposit or a bond?
Is the interest in year 2 calculated on the balance plus year 1 interest?
Only way to tell is by examining the investment paperwork.
Post Office used to do bonds where nothing was paid till end but was taxable on an accruals basis.
Am I missing the point here?
SAIM2440:
"ITTOIA05/S370 provides that tax is charged on the full amount of interest arising in the tax year. This means that a person receiving interest cannot set off any interest payable, bank charges or similar amounts against sums chargeable under ITTOIA05/S369.
Interest ‘arises’ when it is received or made available to the recipient. Interest has been made available if it is credited to an account on which the account holder is free to draw."
Interest ‘arises’ when it is received or made available to the recipient. Interest has been made available if it is credited to an account on which the account holder is free to draw."
That's what I was (unsuccessfully) trying to establish by asking if year 1 interest was credited at the end of year 1 so that in year 2, interest was earned on the original investment plus the year 1 interest.