SAIM2100 | Interest: interest payable from the Financial Services Compensation Scheme: tax certificates

Tax certificates from financial institutions that have been declared in default and from the FSCS

Even if a financial institution has been declared in default by the FSCS, the financial institution should provide its customers with tax certificates for any interest it pays just as it did prior to the default. If a customer submits a tax return or makes a repayment claim then the interest paid by the financial institution should be declared in the appropriate part of the form. For example if the financial institution is a bank then the interest should be included as bank interest on the depositor’s tax return or repayment claim.

The interest paid by the FSCS should similarly be included in the tax return or repayment claim along with interest received from the defaulting financial institution. The FSCS is required to issue certificates of tax deducted if the person receiving the compensation makes a written request under ITA07/S979A(5). In practice the FSCS is likely to issue certificates when it makes the compensation payment.