- Location
- Somewhere wet & hilly in NW England.
Wouldn't it be more like £12160 (£50k + 4.45% = £52,225 in year 1, then 4.45% on the £52,225 for year 2 and so on)?
Makes it sound even better.
Not applicable on this occasion. The interest is 'paid away' annually so no compounding.
Suits us as we have a fair bumber of Bonds all reaching a year marker or maturing in different years.
This means we have to be careful re HMRC rules which state that compounded interest is deemed taxable in the year that the client receives it ie if compounded over 5 years all 5 years interest is taxable on maturity in year 5.
We generally keep our FRB's in Mrs SD's name as she has the full Personal Allowance, the Personel Savings Allowance and the Starting Rate for Savings 'allowance'. But as the number of FRB's that we hold has grown over the years it can, on occasion, be tricky to avoid having to pay any taxes in a particular year, or at least minimising them.