Is interest on Monzo taxed or untaxed?

Hi, I’m filling in my self assessment tax return and there is a section for interest earned.

I’ve downloaded my interest statement from Monzo, but I’m not sure if this is taxed/net interest or untaxed/gross interest.

Does anyone know?

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Surely it’s gross and it’s for you to decide if you need to pay tax on it?

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I think that’s the case, but wanted to check, as I’m sure in the past with a different bank account they deducted the tax (and, the notes on the HMRC website suggest both methods are a thing).

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It should usually be gross. I think that’s how I put it down on my return, anyway.

It should be clear on the Monzo statement of interest though.

Edit: this is what it says on the statement:

Depending on your circumstances, you might have to pay tax on any interest you earn. You can get professional tax advice, or find more information on the HMRC website.

That implies that it’s gross but it could do with being specific. Monzo’s poor writing strikes again. :disappointed_relieved:

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Yeh, I agree it implies it, but it would definitely be nice if it was more explicit.

It would also help if it separated the personal and joint interest a bit more clearly, rather than giving both in one very long sentence (which took me a couple of attempts to parse correctly).

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Oh goodness. I don’t have a joint account but that sounds awful.

I’m on a bit of a mission with Monzo’s drafting at the moment. The tone of voice is good, but the content is sloppy, imprecise and all over the place. Needs attention in 2023.

#LessFraudedMoreFacts

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It needs Monzo to not prioritise tone of voice over accuracy, which it has been guilty of since the 50p overdraft days.

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It’s very clear.

Lots of people don’t know what gross/net mean. It isn’t for Monzo to give tax advice. They’ve suggested you might have to pay it and directed you to the government site.

What do you think it should say?

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Disagree. Monzo should at least explain in clear language that the interest is paid without any tax having been taken away, and explain what the limits are for people who don’t understand this stuff to get the idea.

I thought Monzo was all about taking away the complications around money.

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It is not clear.

No one has suggested this.

I think it should say something like:

This interest is paid gross. This means that it is paid without any tax being taken.

Depending on your circumstances, you might have to pay tax on any interest you earn. You can get professional tax advice, or find more information on the HMRC website.

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You know what some portions of the population are like these days, have to be spoon-fed everything.

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Come on, it’s not spoon feeding to be clear about a point of fact.

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Coming soon

“Your balance is £0.01. This means you don’t have much money”

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How do I downvote comments?

Tax on bank account interest is complex, and it seems a perfectly natural fit for Monzo to be clear on stuff like this.

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Oh good. Can you be a darling then, and tell me which it is?

As far as I can see, the HMRC website has nothing about whether the interest paid by Monzo is taxed or untaxed, which seems entirely reasonable.

There are two fields on the form, one for “If you have a bank or building society account that pays you net interest” and one for “If you have an account that pays you gross interest for example a bank or building society account”.

All I’m doing is asking for confirmation as to which of these Monzo is. Surely that’s not asking for tax advice but asking Monzo how they operate.

I assume they are the latter, as I’d expect otherwise the statement would also show the amount of tax paid - but the statement is very basic.

(It also seems the latter is more common, though the fact it comes second on the form made me initially assume the former must be the more usual arrangement.)

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In Monzo, and other banks there is a document you can download about interest received.

In that document it will state how much interest was received, if tax was deducted and how much.

Click manage, Interest Statements and download one for correct tax year.

At the moment so far Monzo interest is untaxed. Hence the certificates simply have correct sums precomputed for you.

Collect statements from all other places too.

If you have some other type of accounts elsewhere, for example debentures, they do deduct 20% tax, and have interest statements that say so. But it is relatively niche thing for now.

The problem is, in this example, the factual bit (“your balance is £0.01” or “the interest is paid gross”) is missing.

Reasonable people can argue about whether the explanatory sentence is necessary. But I included it in my suggestion because you said that things like gross and net aren’t easily understood:

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Interest from Monzo is gross.

The yearly ‘statement of fees’ doesn’t say it but each product (via their product page) says it’s gross.

The statement of fees should be updated to say if it’s gross or net imo

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Though, is that saying the interest is gross, or is it telling you what the gross interest rate is?

(I’m fairly sure the interest is gross, though I’m less sure this is what that particular thing implies. I am trying to get a definitive answer from Monzo, but have currently been passed onto the 3rd team, and they don’t work weekends.)

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I thought it was fairly standard practice for banks to detuct 20% basic tax from all interest payouts.

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