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HMRC have updated their information page Bank and building society interest – key information.
The page has links to the R85 form and notes and reminds taxpayers that the interest on a term bond will be taxed in the year that it is paid rather than over the years of accrual.
This might, for example, mean that taxpayers who are not liable during most of the term are liable in the year of payment. A single form R85 can cover more than one account at the same bank by showing the separate account numbers.
HMRC have also published update booklet Tax deduction scheme for interest – guidance notes for financial institutions, which replaces the previous notes issued in November 2003.
The notes provide general guidance for financial institutions on deducting basic rate tax from deposit interest and also regarding the payment of interest gross where a form R85 is submitted.
