Why this tax on savings interest?
On February 8 Investec Bank wrote to my daughter and me regarding the maturity on February 29 of a fixed-term deposit account that we held jointly.
It set out various options and we responded on February 19 saying that the money was to be placed in an easy-access account.
Investec did not reply but it later turned out that this account was just an online one and so not available to us. The money was therefore placed in a holding account on which no interest would be paid.
Aware of the imminent implementation of the personal savings allowance on April 6, after which any interest due from banks and building societies would be paid gross, we jointly decided to delay closure until the new tax year. SB, SURREY
You wrote with instructions to close the new account on April 7 but were surprised when you discovered that 20pc income tax had been deducted from the interest on the matured bond.
You objected that you thought any tax liability applied in the tax year in which interest is paid.
Investec explained that, as the deposit had matured in the previous tax year, interest applied to that year.
However, it then said, following my inquiry, that your recent
correspondence had not been dealt with in accordance with its usual high standards. Additionally it could find no clear explanation as to why it took 10 days to release the funds.
In recognition of these points it offered a goodwill gesture of £100.
There was though a subsequent delay in making that payment and in respect of this it has increased the sum to £200.