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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am a non tax payer by virtue of my low income (a state pension

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I am a non tax payer by virtue of my low income (a state pension only). I invested an inheritance 6 years ago which matured last month with a rolled over interest of £17.5k, no annual pay outs. At maturity, 20% was stopped at source for tax; L&G would not accept an R85 form. I can reclaim some of the £3.5k deducted because £4k of my tax threshold will not be used.
However, had the interest been paid out each year, the annual income would be below my tax threshold each year, but as the tax was paid on the aggregated 6 year total, I am out of pocket by £3.5k. If I cannot get an annual interest statement from L&G for the preferred 100% tax reclaim, is the interest payment subject to cgt which has a higher threshold I believe?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.
Let me take a look at this and I'll get back to you in a bit.
Expert:  TonyTax replied 1 year ago.
Hi again.
Assuming it was just a fixed term bond, you won't pay Capital Gains Tax. Usually, in lieu of the interest being added at the maturity of the bond, you get a better rate of interest than if it had been paid annually. In addition, you would have been issued with an interest certificate for each tax year on the anniversary of the bond issue date it the interest was paid annually.
The income will all be taxable in the tax year the bond matured so you will only be able to make a tax repayment claim for one tax year using the R40 that HMRC have sent to you.
I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15885
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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