Building society problem

[JMR27]

Earlier this year I advised my building society that I would be eligible to pay basic rate tax w.e.f. 5/4/08. (Previously I had been in receipt of gross interest). When a 1 year bond matured in May, I noticed that they had deducted tax for the whole duration of the bond instead of for the period 5/4/08 until May 2008. When I asked for a refund I was told to try to reclaim it from the Inland Revenue. My question is shouldn't the building society be sorting this out rather my trying to recover the money? Any advise would be appreciated. Thanks.

[DSJ]

No. You have to claim it back yourself.

[Ethel]

Now this is tricky. If interest is paid annually on the account then it is classed as income for the year it was paid.

So if the interest was due to be paid after 05/04/08, it is income for the current tax year and if subject to income tax.

If the interest was paid monthly, then of course only the interest on months after 05/04/08 would be taxed, the prior months being tax free.

It is just bad timing, I'm afraid. Had it matured on 04/04/08 then of course it would have been tax free.

[JMR27]

Thanks for your answer DSJ.
And Ethel thanks also - oh dear, I hadn't thought of that
-so far it hasn't been a good day and now it's just got worse:o(
thanks again to both of you for your time

[Ethel]

Try phoning the tax office on Monday - they are very helpful and will clarify the situation for you.

[JMR27]

Thanks Ethel but what you said made sense. I was getting in a "strop" because I thought they hadn't carried out my instructions properly (that'll teach me!) regards, judy