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Background

HMRC can require you to complete an Other Interest (OI) return if you鈥檝e:

• paid interest to a reportable individual
• received interest on behalf of a reportable individual

A reportable individual is someone with a residential address in the UK.

The information on your return informs checks to make sure Self Assessment tax returns are accurate and complete.

This guidance will help you make an accurate return and represents HMRC鈥檚 interpretation of the legislation.

Authorised Investment Funds

HMRC should serve a notice on the trustees of each Authorised Investment Fund (AIF). However, to make things simpler, notices are issued to fund managers requiring information from all AIFs under their management. The manager receiving the notice is legally responsible for making the return.

Completing a return

If you need help to complete a return, How to complete an Other Interest return gives step-by-step guidance to using either the:

• HMRC spreadsheet
• electronic flat text file

Alternatively, you can arrange for a third party to complete the return on your behalf, but you remain responsible for ensuring the content is accurate and submitted on time.

Appealing against data-holder notices

Unless the notice is issued following tribunal approval, the grounds for appeal against a notice can include any of the following:

• it鈥檚 unduly onerous for you to comply with the notice or a requirement in it (this does not apply to data that tax law states you must keep)
• you鈥檙e not a relevant data-holder
• the data you鈥檝e been asked to provide are not relevant data

Nil returns

In some circumstances you can make a nil return.

You must inform HMRC if you want to make a nil return. You can do this by email to tpi.a@hmrc.gov.uk.

The returns cycle

This example relates to the 2024 to 2025 tax period but the process follows the same annual cycle.

Date	Event
6 April 2024	UK tax year begins
Late February 2025	HMRC issues BBSI and OI notices requiring you to make a return
5 April 2025	UK tax year ends
30 June 2025	Deadline for submitting a return 鈥� unless otherwise stated in your notice

Keeping Records

HMRC usually issues notices in February each year as part of the normal returns cycle. HMRC can also issue notices relating to previous tax years.

You may be required to make a return at any time up to 4 years after the end of the relevant tax year. You should keep records for this period. For example, HMRC can issue a notice requiring you to make a return for the 2023 to 2024 tax year (6 April 2023 to 5 April 2024) at any time up until 5 April 2028.

If you are required to make a previous years return, you must keep all the records used to make your return for a further 2 years after the return in question is submitted. For example, if HMRC requires you to make that return for the 2023 to 2024 tax year (6 April 2023 to April 2024) in July 2027, you should retain those records until July 2029.

Interest you do not need to include on a return

You should not report interest:

• paid to non-individual account holders such as companies, associations, partnerships and clubs
• only collected passively, for example, where a bank clears or arranges clearance of a cheque for foreign interest, having taken no steps to secure payment of those monies
• that is not easy to identify as interest
• on Individual Savings Accounts (ISAs)
• paid to, or received on behalf of, pension scheme trustees, including any self-invested personal pension (SIPP) or small self-administered scheme (SSAS) pension that has been registered by HMRC
• paid to registered pension schemes, including individual pension accounts
• paid by you on cash deposits at branches outside the UK unless that interest is remitted to the UK, received (other than passively) and you鈥檙e acting for a reportable individual (read interest directed elsewhere for more information)
• paid on investments, other than cash deposits, held at branches outside the UK, unless paid, or received (other than passively), by you in the UK for a reportable individual
• that has accrued but has not yet been paid or credited
• on Save as You Earn or Share Save Schemes
• on National Savings and Investments certificates and Children鈥檚 Bonds
• on Child Trust Funds or Junior ISAs
• that is redemption proceeds of deeply discounted securities
• that is foreign dividends except where the distribution is taxed as interest (if you cannot immediately identify if the payment or receipt is interest, then the distribution is not reportable)
• that is repossession interest
• that is manufactured payments

Negative interest

Negative interest does not meet the definition of interest. In this case, it鈥檚 comparable to a fee paid to a financial institution to hold a reportable person鈥檚 money.

For example, if a reportable person is paid 拢300 of interest in a year where they鈥檝e paid 拢100 of 鈥榥egative interest鈥� then you still need to report the full 拢300 in your return.

R85 gross registered and R105 cases

HMRC no longer requires R85 and R105 forms.

The How to complete an Other Interest return guidance explains how to complete these fields in your report.

Types of return

There are 2 types of return:

• Other Interest
• Bank and Building Society Interest

Some banks and building societies may need to complete both returns. Your notice from HMRC will identify the type of return required.

Other Interest

This is completed by:

• banks, building societies or other deposit takers in the UK operating in the normal course of their business, which includes in an intermediary capacity (interest distribution from bonds or certain funds) or when compensating customers for being deprived of money
• any person carrying on a trade or business who, operating in the normal course of their business, receives or retains money in such circumstances that interest becomes payable

Bank and Building Society Interest

BBSI returns are completed by banks, building societies or other deposit takers in the UK operating in the normal course of their business.

Making both types of return

There may be occasions when HMRC requires both an OI and a BBSI return. When this happens, it鈥檚 important that you:

• use the correct return for reporting the interest type
• only report the interest relating to a customer once, and do not duplicate it on both the BBSI and OI return

When Other Interest can be reported on a BBSI return

You can report OI information on the BBSI return (using the BBSI format and guidance) rather than on the OI return in the following circumstances:

• building societies that pay interest on permanent interest-bearing shares
• local authorities reporting interest paid or credited to individuals
• National Savings and Investments reporting interest paid on some of their products

However, if you are not required to make a BBSI return, these must be reported on your OI return.

Making an Other Interest return

If you receive an OI notice, you must make a return regardless of the nature of your business. This includes UK branches of non-resident businesses.

In these cases, only the interest paid or received by the UK branch should be put on the return. Do not include interest paid or received by parts of the business that are not resident in the UK. This may mean that more than one person could report one interest payment. For example, if a broker and their 鈥榗learer鈥� both receive notices.

If you receive a notice and know that someone else will be reporting the same information, notify HMRC鈥檚 data acquisition team by emailing DA.Enquiries@hmrc.gov.uk.

You do not need to make enquiries to find out whether anyone may be reporting the same interest as you.

If the payee or recipient is not an individual, or not reportable, do not include their interest in your return. For example, if you pay interest to a nominee company that is acting for an individual, do not include it in your return. Similarly, do not report payments by AIFs to a reputable intermediary.

You should be able to decide from the information you hold whether a person is a reportable individual.

HMRC does not expect you to, either:

• make further enquiries to establish this
• have prior knowledge of whether a customer is liable to pay tax before including them on your return

If your records name the account holder, or recipient of the interest, as an 鈥榚ntity鈥�, 鈥榬epresentative鈥� or 鈥榯rustee鈥� rather than an individual, you do not have to report their interest.

Example of account holder names

Account holder details	Reporting status
G&G Investment Club	no report is required, as this does not appear to be an individual
Green and Griffin	a report is required, as this appears to be 2 individuals
Green (Treasurer)	no report is required, as this appears to be a representative

Interest you should include on your return

This includes:

• interest on all investments paid or received in the UK, other than passively, to or for any reportable individual
• foreign interest (interest received from a non-UK source)
• quoted Eurobond interest (a quoted Eurobond is issued by a company, carries a right to interest and is listed on a recognised Stock Exchange)
• interest on building society permanent interest bearing shares (PIBS)
• UK Gilt interest (but not accrued interest that is reflected in the sale or purchase price)
• interest distributions by UK authorised investment funds (even if they are not paid as interest but are used to acquire more units or increase the value of existing units)
• interest paid on bearer instruments

Invalid Individual Savings Accounts

You should report interest paid or credited to an:

• invalid ISA
• ISA that has been repaired, up to the date of repair

If the ISA is repaired or found to be invalid before you send HMRC the return, show the correct position on the return.

If you have already sent in the return when either of these happen, do not send a further return but retain the details in case HMRC requests them.

Registered pensions schemes

Before 6 April 2006, HMRC would approve pension schemes that met certain criteria and issue them with an approval letter. If the letter was passed to their interest payer, the payer did not have to report the pension scheme鈥檚 interest on their BBSI return.

This changed from 6 April 2006. Pension schemes are now 鈥榬egistered with HMRC鈥� not 鈥榓pproved by HMRC鈥�. Almost all schemes previously approved by HMRC were transferred directly to the register on 6 April 2006.

Any pension scheme opening an account after this date must download its registration details and give these to the interest payer as evidence of registration.

Interest payers can rely upon previously lodged 鈥榓pproval鈥� letters as proof of registration for existing accounts or schemes, unless they have evidence that the scheme is no longer registered.

Interest amount below the personal savings allowance

If the interest earned or credited for an investor is below the personal savings allowance, you should still make the return.

This is because the investor may have more than one account and will need to pay tax on the total earned across all accounts.

Pooled assets

If interest is paid to, or received on behalf of, an identifiable reportable individual via a pooled account, the interest is reportable on your OI return.

If the interest cannot be tied to a particular individual on a pooled account, it is not reportable on receipt.

The interest is only reportable once it has been paid to a reportable individual. HMRC then requires the pool account operator to make an OI return.

Change in account ownership during the tax year

Account holders may change during the tax year. For example, an account may change either from being:

• in a sole name to joint name based on change of use
• from joint name to sole name when one of the owners dies

Where there has been a change of account holders during the year, you should report the account owner, at the end of the tax year, as having received all the interest paid or credited. You may also report interest pre and post ownership change if your systems are able to do so.

Joint accounts

A joint account can be made up of multiple joint account holders, most often it includes 2.

A joint account is reportable if any of the account holders is a reportable person. Return the names of all reportable joint account holders. If you cannot do this, report as many of them as practical.

Inclusion of all reportable joint account holders allows HMRC to match the data with customer accounts.

You should always report the total amount of interest paid or credited.

Partnerships

The term 鈥榩artnership鈥� includes ordinary, limited liability and limited partnerships.

If your records name the account holder, or recipient of the interest, as a 鈥榩artnership,鈥� this is considered a non-individual account you should not report the interest.

Trusts

A trustee manages money or assets in a trust on behalf of that trust鈥檚 beneficiaries.

If the account holder is identifiable as a trustee, the participant type is a 鈥榥on-individual鈥�, and therefore, not reportable.

If interest is paid or credited directly to a beneficiary that is a reportable individual, the account is reportable.

Charities, clubs and organisations

You should not report the interest if they are non-individual accounts. They are considered non-individual accounts if the account holder is acting as either the:

• trustee of a charity or foundation
• office bearer or representative of a club or organisation (such as treasurer or secretary)

Deceased investors

If the account holder at the reporting date is identifiable as an executor or personal representative, the account is considered non-individual and you should not report the interest.

If the account holder dies and there is a change of account holder at the reporting date, you should apply the rules for account ownership during the year.

If you are not immediately informed of a customer鈥檚 death, you should make your return based on the facts known to you at the reporting date.

Accounts opened by individuals acting as personal representatives

If an account is opened by individuals acting as personal representatives, you should strongly advise the customer to name the account so that it is clear they represent another person. This will allow the account to be identifiable as non-individual for reporting.

If this is not clear from the account name, the individual could be taxed on the interest paid or credited to that account.

Sharia accounts

You must include payments on Sharia compatible accounts and other types of alternative financial arrangements in your return as if these amounts were interest.

Definitions of 鈥榓lternative financial returns鈥�, including accounts compatible with Sharia law are covered in paragraph 12 of schedule 23.

Bankruptcy and insolvency

The interest should be reported if the payee is a 鈥榬eportable person鈥�.

Addresses

Reportable addresses are addresses that are in the UK.

Generally, it鈥檚 the address on 5 April of the returning year. If your system is set up to report based on information available on the date interest is paid or credited, HMRC will accept your report of that information.

If asked, you must be able to show HMRC:

• why you have included, or excluded any payment or credit of interest from your return
• that the addresses reported (or not) are the addresses of the persons interest has been paid or credited to

Customers with more than one address

You should return the individual鈥檚 residential address. Only return a correspondence address if you do not hold the residential address. This may mean that you do not report some interest.

For example, your 鈥楰now your customer鈥� information shows your investor has a UK correspondence address, but a Russian residential address. You would not include interest relating to this investor on your return because their residential address is outside the UK.

鈥楪one away鈥� and dormant accounts

If an account is marked 鈥榞one away鈥� at the time the Other Interest return is prepared, and interest has already been paid or credited, you should report the last known address. This should be a UK address.

If an account is dormant for 15 years, the money (with all interest outstanding) should be transferred to a reclaim fund or equivalent charity scheme.

You do not need to report the interest when you transfer money to a reclaim fund. Only report it if the owner comes forward and reclaims the money from the fund.

Report the total interest (accrued but not reported whilst unclaimed) in the tax year the owner comes forward.

Closed accounts

Include any interest paid or credited to the account if the investor had a UK address on the date the account was closed.

British Forces Post Office or 鈥榗are of鈥� addresses

The address to be reported is the account holder鈥檚 current residential address in the UK.

In general, a British Forces Post Office or an in 鈥榗are of鈥� address is not a residential address but are considered a correspondence address.

Where such addresses are provided (within your remit as a financial institution) further enquiries with the account holder may be needed to clarify whether it is a residential address.

British Forces Post Office address

If at the point of reporting, a British Forces Post Office address is the only address held on file then irrespective of the location of the British Forces Post Office address (UK or non-UK), you should report details of the account including the British Forces Post Office address held.

In 鈥榗are of鈥� address

If at the point of reporting, an in 鈥榗are of鈥� address is the only address held on file, it can be accepted as a residential address for the account holder if it includes details that makes the address clearly identifiable, such as:

• street name
• apartment or suite number
• a clear rural route

If it is a UK address the account should be reported with that address.

If it is a non-UK address the account should not be reported.

If it contains insufficient detail to clearly identify a place of residence (UK or non-UK), then the account should be reported until confirmation of the residential address is received from the customer.

Submitting your return

The notice that HMRC sends you will specify the methods and deadline by which you need to submit your return.

You can find more detailed information about formatting and submitting your return in the How to complete an Other Interest return guidance.

Penalties

HMRC can charge penalties under schedule 23 of the Finance Act 2011 (paragraphs 30, 31 and 32). The following penalties apply if HMRC sends you a notice to make a return and you do not comply:

• 拢300 for failure to comply in the first instance
• up to 拢60 for each additional day that the return is not made after the date the 拢300 penalty is imposed

If you still do not comply, the law allows HMRC to apply to the First-tier Tribunal for a penalty of up to 拢1,000 per day.

There is also a penalty of up to 拢3,000 for an incorrect return, so you should take reasonable care when making your return and do not make a deliberately incorrect return.

Inform HMRC immediately if you submit a return and then discover an error. This may help minimise any potential penalty.