Qualifying Time Deposits (QTDs)
HM Revenue & Customs (HMRC) have recently been asked to clarify the QTD rules. Following these changes to the HM Revenue & Customs guidance notes, we have reviewed our fixed rate bond terms and conditions. We have been advised by HM Revenue & Customs that any fixed rate bond with a term of a year or less where the deposit is at least £50,000 is classified as a Qualifying Time Deposit.
This now means that interest earned on fixed rate bonds held with Anglo Irish Bank which meet the criteria for a QTD will be automatically paid without deduction of tax irrespective of whether or you are entitled to receive interest paid gross through the use of an R85 declaration. You will be responsible for declaring the income to HM Revenue & Customs and paying any tax due.
Please see below for the five criteria that HMRC use to determine if an account meets the QTD requirements. Please refer to the HMRC website www.hmrc.gov.uk or call them on 0845 900 0444 for more detailed information, or contact your tax advisor or local tax office.
An account is a QTD if the terms & conditions for the account meet the five criteria below:
- the deposit is at least £50,000
- repayment to be made at a specified time within five years of the QTD being made
- makes no provision for the right to repayment to be transferred to a third party
- prevents partial withdrawals
- prevents any additions being made to the account
If all of the above HMRC conditions are met in the terms & conditions the account will automatically be a QTD.
If the terms & conditions do not meet the HMRC criteria the account is not a QTD. So, for example, if the terms & conditions do not meet the criteria because they allow additions to the account, but the saver does not make any additions to the account, the account is still not a QTD.
Please refer to our FAQs to see how the QTD guidelines may affect your account.