Overview
- Lewis highlighted that for tax purposes interest counts at the first moment it is accessible, not necessarily when it is credited.
- Instant-access interest is taxable when paid, whereas fixed-term interest should be taxed at the end of the term when funds can be withdrawn.
- He warned that savers who opened multi‑year fixed accounts before retiring may have been taxed at higher rates in earlier years than they should have been.
- For people not in self-assessment, providers report interest to HMRC and tax is collected via PAYE, which he fears may reflect payment dates rather than accessibility.
- Current rules include a tapering £5,000 starter rate for savings, a Personal Savings Allowance (£1,000 basic rate, £500 higher rate, none for additional rate), and tax-free ISAs up to £20,000.