I'm afraid Tax is due on the day, and hence the Tax year, the interest is paid irrespective of the term earning it. Bad luck for you but in the future you might find this useful for Tax planning.....

IMHO

Hi there,

This is my first post on the forum. I have a query regarding how tax is paid on interest on fixed-term accounts. I opened a nine-month fixed term account (back in October when the rates were pushing 7%, oh the memories...). This will of course mature in July. The interest in this account is calculated daily but will only be paid on maturity. The thing is, this nine-month period is spread over two consecutive tax years: is it possible to declare, for the 2008-2009 tax year, the interest which accrued between October, when I opened the account, and April 2009, and the remainder in the next 2009-2010 tax year? It seems like it would be absurd that I should have to declare it all for 2009-2010: what if it was a 5-year fixed-term account? Would the whole 5 years of interest be counted in a single tax year?

Presumably many people here have encountered similar issues when filling out their SA tax returns. Because I was a student for most of the 2008-2009 tax year and employed the next, this could make a very big difference!

Many thanks in advance for your input!!!

p25