Gross or net interest paid

Posted on December 24, 2013

Interest on term deposits in excess of £50,000 is paid gross without deduction of tax. The Revenue is automatically notified by the banks of interest paid to customers and they compare this information with the figures entered on the self assessment tax return. They pay particular attention to those accounts where interest is paid gross and we are finding this is a common cause for the Revenue opening enquiries into clients’ returns.

Another point about interest received is that sometimes clients are forgetting the interest on their online accounts.  Although banks are required to issue a tax deduction certificate for all savings accounts, the certificate for online accounts is usually only available by downloading it from the appropriate website.  It is therefore important that clients keep a record of all accounts open at any time in a particular tax year (which runs from 6th April to 5th April the following year). Please ensure that you obtain a certificate for each account even if the account has since been closed and send these to us with a summary of all accounts held.  We do not need details of tax exempt accounts such as ISAs but it is useful to make a note of such accounts on the summary so as to keep track of them.

Clients really need to take care over their bank accounts as it is possible that the Revenue may start charging penalties if interest is omitted from their tax returns.

If you would like to discuss any of the issues relating to this, please do contact us.

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