I thought so too, however, some bonds are very unclear. For instance, I’ve got a monthly paid bond, but fixed for a year, and althoug it runs over two different tax years I have to declare the interest in the year the bond matures.
On the other hand, I have a very similar bond in a different bank and they made crystal clear that the interest are paid monthly so I have to make the counts per month and add them to the tax year that they belong.
The funny thing is that I found out the above after signing for the bonds as no one clearly stated how to treat the interest before hand.
As far as I know the rule is count it when it’s paid, I’d double check with HMRC about the former one you mentioned “fixed for a year and paid monthly”. Off the top of my head I’d expect you to pay tax on the bond income within its respective tax year (that you received it)
Obviously not tax advice, that’s what professionals are for (and HMRC)
Similar to what others have said, my understanding is you should calculate your tax liability for a given year based on the interest you receive within that year. If you are receiving monthly interest payouts I don’t think it matters if it’s coming from a bond which doesn’t mature until a future tax year.
Of course, if it’s a bond where you don’t receive the interest until the bond matures, then it’s different and you wouldn’t include in your liability calculation until the tax year in which you actually receive the interest.
My comments are based on the tax certificates each bank issued to me for the past tax year (2021/22).
It did not matter at all as I was not reaching the £1000 threshold but it made me wonder how it actually works.
As I said, banks take two approaches and, from my point of view, are unclear.
The situation is as follows: Two different banks, two 1 year fixed bonds, both of them pay montly, both of them ran through 2 different tax years. Once I received the year tax certificate, each bank did the following:
Bank 1: Interest for tax year 20/21 - Interest x 9 months ; Interest for tax year 21/22 - Interest x 3 months
Bank 2: All the interest for tax year 21/22.
And the above is what really confuses me. In any case I had access to the interest until the bonds did mature.