Nationwide, NatWest, Lloyds customers issued HMRC warning
Experts have explained that Brits with long-term fixed-rate savings accounts might get an unwelcome knock on the door from HMRC.
A lot of banks nowadays offer two or three-year fixed savings accounts as a way to grow your funds.
But while you're counting the cash at the end of the term, you could be hit with a tax demand because HMRC views the interest from these accounts as income within a single year.
Got a #sidehustle? 💸
We're here to help you get your tax right. ✅
Click below to check if you need to tell us about your side hustle income today. ⬇️https://t.co/D56rzpHInt pic.twitter.com/bDOVZauouv
For some savers, the final payout could nudge them over the tax-free threshold, triggering a tax event. However, it's key to remember that this doesn't apply to cash ISA accounts, which remain tax-free up to £20,000.
The current tax-free interest earnings cap for basic-rate taxpayers sits at £1,000 annually. Those on the higher-rate can pocket up to £500 without owing tax, but additional-rate taxpayers aren't afforded any tax-free interest allowance.
Laura Suter, personal finance director at AJ Bell, told the Star: "Many people won't realise that [fixed rate accounts] could leave them with a tax headache in the future."
She added: "You are taxed on the interest on your savings when it is accessible by you.
"So if you pick a fixed-rate savings account that pays out all the interest at maturity, for tax purposes all of that interest will be counted in one tax year.
Recommended reading:
"This means that the interest from just one account could take you over your Personal Savings Allowance on its own."
Ms Suter suggested getting an account where interest is paid out monthly or annually instead.
She continued: "This means it is spread across different tax years.
"Or you can opt for a fixed-term ISA savings account, where you won't pay any tax on the interest."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Mirror
2 hours ago
- Daily Mirror
Reeves to splash billions of pounds on NHS and schools - but other cuts loom
Chancellor Rachel Reeves admitted that some vital public services will lose out on funding in next week's Spending Review - 'I'm not able to say yes to everything' Rachel Reeves will pour cash into the NHS, schools, security and firing up the economy as she hit back at fears of fresh austerity for cash-strapped public services. The health service is expected to be the big winner in Wednesday's Spending Review, with a 2.8% hike to the Department of Health's annual budget - amounting to around £30billion in additional funding by 2028/29. The Mirror understands schools will also get a major boost to per pupil funding, with £4.5billion extra for the core schools budget. But other vital services will feel the squeeze, with painful cuts expected in areas like local government and policing. On Wednesday, the Chancellor will spell out how much cash will be allocated for day-to-day budgets over the next three years. Speaking to the Sunday Mirror in her Leeds West and Pudsey constituency, she said: "This is a far cry from what you would have had if you'd had another five years of the Conservatives - £300billion above that. Under our plan, spending will increase every year in this Parliament. "I tell you what austerity is, it's what George Osborne did, where spending fell by 2% every year when he was Chancellor and [David] Cameron was Prime Minister. Spending will grow at close to 2% every year under the plans that I will lay out." There will be a £190billion increase in funding for day-to-day spending over the period, funded partly by tax hikes in the Budget in the autumn. A shake-up of borrowing rules has also freed up around £113billion for capital investment for big ticket items like homes, transport and energy projects. Security will be top of the agenda as "we live in a changed world, everyone can see that," the Chancellor said. "The first duty of any government is to keep its people safe." The Government has already promised to hike defence spending to 2.5% of GDP by 2027/28, funded through a raid on the foreign aid budget. The NHS will get a big cash injection to help the Government meet its commitment to slash waiting lists currently around 7.4million. Her other focus will be growing the economy to drive up living standards for ordinary Brits. But Ms Reeves admitted some areas will lose out. "I'm not able to say yes to everything, and there are things that I would like to do, but we don't have the money to do them," she said. "But your readers will remember two and a half years ago when a Conservative Prime Minister and Chancellor crashed the economy. "As a result, they paid more for their mortgages and more in their rents, and readers who run their own business, particularly small businesses, found that the cost of running their business went up as inflation and borrowing rates went through the roof. "So we have to say no to some things, because we've got to make sure that that stability is returned to the economy." This week, the Chancellor confirmed plans to rip up Treasury rules blamed for favouring investment in prosperous areas in the South of England. Instead, some £15.6billion will be handed to mayors to improve trams, trains and buses outside of London. Ms Reeves said: "It means that people can be able to stay in the place where they grew up, the place they want to live, where their families are, but still be able to access some of those great jobs paying decent wages in the city, and they will be able to commute in easily and affordably in a way that isn't possible today. "That narrows down the options for lots of people about the jobs they do. Also for young people, it narrows down the options about where to go to college, what apprenticeship to take up. "And I don't want people's options to be narrowed. I want people's options and opportunities to be broadened and their aspirations to know no limits." But she acknowledged that voters are sceptical and said there was "no time to waste" in delivering for parts of the country betrayed by Boris Johnson's levelling up boasts. "We've got to get on with [it]", she said. "I don't want people waiting for another decade before they see improvements in their area. "We've spoken about a decade of national renewal, but there's no time to waste. We're getting started." Pressed on whether she would deliver where the Tories failed, she said: "Yes, and the reason that I can say that to Mirror readers is because I know that there's a lot of cynicism that things have been promised in the past." She added: "I'm as cynical as the next person when it comes to these promises, but we've set out five years worth of funding this week." Ms Reeves admitted she'd had to take tough decisions, including hiking national insurance contributions for businesses in the autumn Budget and plans to slash £5 billion from the welfare bill. Labour MPs are in revolt over the decision to make up most of the welfare savings from cuts to Personal Independence Payments (Pip), which help disabled people with the added costs of daily life. Ms Reeves said that difficult decision had allowed her to plough cash into public services and invest in the future. She said: "We are choosing investment rather than decline. The previous government chose decline. That is not the path that we're choosing. We're going to renew Britain and make working people better off in the process." Ms Reeves said she recognised the last few years had been tough for ordinary Brits but added: "We're beginning to turn the corner because of the choices that we've made." 'We will reduce child poverty' Rachel Reeves said driving down child poverty is a "moral mission" and insisted Labour would lift more kids out of hardship. The Chancellor said the decision this week to extend free school meals to more than 500,000 additional pupils next year was a statement of intent. From next September, all children in families receiving Universal Credit will get a free school lunch - in a major victory for the Mirror's campaign to end hunger in the classroom. But the Government is under intense pressure to commit to more drastic action to end the scourge of child poverty. A long-awaited strategy has been delayed to the autumn amid mounting calls from Labour MPs for an end to the Tory two-child benefit limit, which has been blamed for pushing families into poverty. Asked if she was listening to these calls, Ms Reeves told the Sunday Mirror: "I joined the Labour Party when I was 17 years old, because my experience at my local state school was that my sixth form was two prefab huts in the playground joined together. "Our school library was turned into a classroom because there were more students than space and never enough textbooks to go around." She added: "There were loads of girls that I was at school with who did not have the opportunities. They went to school every day and probably felt that the government didn't care very much about communities like ours and families like theirs. "When Tony Blair talked about 'education, education, education', that really resonated with me, because I strongly believe that whatever your parents do, whatever income your family's got coming in, whatever your background, you deserve a really good start in life. "And I know that kids who are going to school in empty bellies, who don't have a space at home to do their homework, who don't have the opportunities of books at home, and where the mums and dads don't have the security of a job that pays a decent wage, that they just don't have the opportunities that other kids do. And that's what I came into politics to do something about." She added: "We will lift more children out of poverty. We will reduce child poverty. That is a moral mission for all of us."
Western Telegraph
13 hours ago
- Western Telegraph
Nationwide, NatWest, Lloyds customers issued HMRC warning
Experts have explained that Brits with long-term fixed-rate savings accounts might get an unwelcome knock on the door from HMRC. A lot of banks nowadays offer two or three-year fixed savings accounts as a way to grow your funds. But while you're counting the cash at the end of the term, you could be hit with a tax demand because HMRC views the interest from these accounts as income within a single year. Got a #sidehustle? 💸 We're here to help you get your tax right. ✅ Click below to check if you need to tell us about your side hustle income today. ⬇️ — HM Revenue & Customs (@HMRCgovuk) June 4, 2025 For some savers, the final payout could nudge them over the tax-free threshold, triggering a tax event. However, it's key to remember that this doesn't apply to cash ISA accounts, which remain tax-free up to £20,000. The current tax-free interest earnings cap for basic-rate taxpayers sits at £1,000 annually. Those on the higher-rate can pocket up to £500 without owing tax, but additional-rate taxpayers aren't afforded any tax-free interest allowance. Laura Suter, personal finance director at AJ Bell, told the Star: "Many people won't realise that [fixed rate accounts] could leave them with a tax headache in the future." She added: "You are taxed on the interest on your savings when it is accessible by you. "So if you pick a fixed-rate savings account that pays out all the interest at maturity, for tax purposes all of that interest will be counted in one tax year. Recommended reading: "This means that the interest from just one account could take you over your Personal Savings Allowance on its own." Ms Suter suggested getting an account where interest is paid out monthly or annually instead. She continued: "This means it is spread across different tax years. "Or you can opt for a fixed-term ISA savings account, where you won't pay any tax on the interest."
Scottish Sun
14 hours ago
- Scottish Sun
Holiday ATM warning that could leave holidaymakers without cash this summer
Read below for another mistake you should never make BANK ON IT Holiday ATM warning that could leave holidaymakers without cash this summer Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) HOLIDAYMAKERS might end up without cash this summer if they are not aware of this banking feature. Many travellers choose to withdraw cash at the ATM when they are abroad. Sign up for Scottish Sun newsletter Sign up 1 There is a limit on how much money you can take out from a cash machine abroad Credit: Getty However many could be unaware that there is a limit to how much you can take out every day The amount can vary so it is worth checking with your provider ahead of your travels to avoid being caught short. Below we share how much money each high street bank lets you withdraw each day. BARCLAYS The bank of over 20 million Brits lets customers withdraw up to £300 per day when abroad. This rises to £1000 for those with a premier account. Barclays said customers have amended their cash limits in their Barclays app then these will apply when abroad as well. That means if you set your withdrawal limit to £200, you will only be able to take this much out when you are abroad. You will also be charged a 2.99% fee for withdrawing cash abroad with your Barclays debit card. That means you would be charged an extra £2.99 for withdrawing £100 abroad. The fee will also apply if you pay using your debit card. Lloyds Lloyds said customers can withdraw up to £800 per day when abroad. However, it warned the amount you can take out may vary depending on which ATM you choose to withdraw cash from. Lloyds customers are also charged a 2.99% fee for using their card abroad. But Club Lloyds members have recently had this fee waived as part of changes to the scheme. It now costs £5 per month to have a Club Lloyds account after the price was hiked from £3. Halifax Halifax is a subsidiary of Lloyds and also has a £800 maximum withdrawal fee. Customers are also charged a 2.99% fee for using their card abroad. But from August 1, Halifax Rewards customers will have this charge removed. It comes as part of a refresh of the banking offer, which will see new features added and some taken away. SANTANDER The high street bank said the highest amount that customers can withdraw abroad is £300. The same rate applies to customers withdrawing cash in the UK. This applies to Santander customers using the Edge, Edge Up and Everyday current account. However customers with a Private Current Account, which has a £5 monthly fee, the daily withdrawal limit can be up to £1,500. Santander warned this may vary depending on the ATM. NATWEST NatWest has over 19 million users across the UK, making it another popular bank for customers. How much you can withdraw from an ATM when abroad depends on what type of account you have. For example, customers with a student, graduate savings and teen accounts have their limit set at £250 per day. This increases to £300 for those with premium accounts such as NatWest Silver of Platinum, which offers rewards and travel insurance. The bank also charges customers a 2.75% fee to use their debit card abroad. NATIONWIDE The bank, which has 17 million customers, said current account holders can withdraw up to £500 per day at an ATM abroad. However, the bank warned overseas banks may put higher limits on transactions. For safety purposes and customers may find they are only able to withdraw a sterling equivalent of £135 to £150 per transaction. If customers are affected by this, they can make further withdrawals on the same day up to the accounts withdrawal limit. Customers may be charged for their transactions. Nationwide customers are charged a 2.75% fee to use their debit card abroad. BEWARE OF THIS SIMPLE MISTAKE If you are travelling abroad this summer you should also be aware of this easy ATM mistake that could cost you. Cash machines will usually give you the option to pay in the local currency or in pounds. It may seem like the obvious option to pay in pounds, as it's more familiar and the currency linked to your card. However, by choosing this option you could end up paying more for the cash coming out of the ATM or for the goods you're paying for at the till. That is because the overseas bank will do the conversion to pounds and the rates are unfavourable. However, if you choose to pay in the local currency your card will instead do the conversion which is usually much more favourable. So if you are keen to save cash when abroad, you should opt to pay in the local currency and not pounds.
