Policy paper

Interest income schema guidance

Published 3 November 2026

Overview

HMRC requires UK financial institutions and UK branches, to submit information about interest paid or credited to ‘reportable persons’.

Reporting frequency depends on the type of interest: some must be reported quarterly and other interest annually.

The ‘Reportable interest’ section explains which interest to include or exclude and when to report it.

HMRC uses the information to:

• check that Self Assessment tax returns are complete and accurate
• pre-populate customer tax accounts, PAYE coding notices, and tax calculations

This guidance sets out HMRC’s interpretation of Schedule 23 of the Finance Act 2026 and the data-gathering regulations to help you submit an accurate return.

Information you must report

You must report every account on which reportable interest has been paid or credited to an account holder with a UK address.

Reportable persons include individuals and non-individuals, such as partnerships, associations, companies, clubs, executors, and trustees.

Do not report accounts held by account holders with an address outside the UK, including companies that are not UK resident.

You can usually determine whether an investor is a reportable person from the information collected through your Know Your Customer information.

HMRC does not expect you to:

• make additional enquiries solely to establish whether the investor is a reportable person
• know whether an account holder is liable to pay tax before including them in your return

However, you must categorise reportable persons accurately so that HMRC can apply the correct tax treatment.

Reportable interest

Interest you do not need to report for all returns

• a certificate of deposit (including transferable paper)
• an investment or deposit held by a branch situated outside the United Kingdom.
• to a person tax resident outside the UK
• paid to approved or registered pension schemes, including individual pension accounts
• paid to, or on behalf of, pension scheme trustees, including any self-invested personal pensions (SIPP) or small self-administered scheme (SASS) pension.
• an investment under a plan provided for by investment plan regulations
• on Child Trust Funds
• an Individual Savings Account (ISA) or a Junior Individual Savings Account (Junior ISA), unless they are invalid or have been repaired
• on Save As You Earn or share save schemes
• a relevant dormant account—
  • prior to a repayment claim in relation to the account being settled, or
  • which, when it first became a relevant dormant account, was a plan provided for by investment plan regulations

Interest you do not need to report for Quarterly reporting

• to central monetary institutions and international organisations listed below:
  • the Asian Development Bank — SI 1984/1215
  • the African Development Bank — SI 1984/1634
  • the European Union — SI 1985/1172
  • the European Atomic Energy Community — SI 1985/1172
  • the European Investment Bank — SI 1985/1172
  • the European Bank for Reconstruction and Development — SI 1991/1202
• in respect of syndicated loan interest
• on inter-bank deposits (including building societies)

Interest you do not need to report for annual reporting

• 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
• 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’re acting for a reportable individual
• paid on investments, other than cash deposits, held at branches outside the UK, unless paid, or received (other than passively), in the UK for a reportable individual
  • on National Savings and Investments certificates and children’s bonds
  • 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 the payment as interest, it is not reportable)
  • that is repossession interest
  • that is manufactured payments
  • investment trusts paying interest distributions under The Investment Trusts (Dividends) (Optional Treatment as Interest Distributions) Regulations 2009

Interest reported quarterly

Interest on current and savings accounts should be reported quarterly. This includes, but is not limited to, accounts held in banks, building societies, credit unions where interest is paid rather than dividends, and National Savings and Investments (NS&I).

Interest reported annually – other types of Interest

All other types of interest should be reported annually. 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

Inaccessible interest

You should report interest in the reporting period in which it is paid or credited.

However, if the investment terms and conditions prevent the account holder from accessing the interest until the end of the term, you should report the total interest in the reporting period in which the term ends.

The interest frequency should be reported as ‘ad hoc’ so it is not included as an ongoing regular payment in tax liability forecasts.

Example

Scenario	Sam took out a 5-year fixed-term bond on 6 April 2028. Interest is credited annually on 31 December.
Access	Sam can access both the interest and principal before 5 April 2033 by paying an early-access penalty.
Reporting treatment	Because the bond terms permit early access, report the interest in each reporting period in which it is credited.
Alternative treatment	If the bond terms prohibit access before maturity, report the total interest in the reporting period in which the bond matures.

Interest below the Personal Savings Allowance

If the interest paid or credited for an investor is below the Personal Savings Allowance, you should still submit the return.

This is because the investor may have more than one account and may need to pay tax on the total interest paid or credited across all accounts.

Negative interest

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

This means it cannot be used to offset interest paid.

Example

Scenario	An account holder receives £300 of interest and pays £100 of negative interest in the same reporting period.
Reporting treatment	Report the full £300 of interest. Do not offset the £100 of negative interest.

Invalid Individual Savings Accounts

You should report interest paid or credited to an:

• invalid Individual Savings Account (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 either event occurs after you have submitted your return, do not submit a further return. Keep the details in case HMRC requests them.

Registration

Further information on the registration processes will be published as soon as possible.

Submitting your return

You must use the online service to submit returns to HMRC.

You must either:

• upload an Extensible Markup Language (XML) file
• complete a return manually using the service for up to 250 reportable persons

XML files can be up to 10GB and must comply with the reporting XML schema and guidance. After submission, HMRC will check the file against the schema and business rules.

If the file fails these checks, you will be notified. You do not need to delete it—correct the errors in the existing file and resubmit it as per instructions in schema guidance.

HMRC cannot correct or delete information on your behalf.

Important

A data element being non-mandatory on the HMRC portal or in the HMRC schema does not mean that the information is optional under the reporting requirements. You must report the information if it is within your power or possession.

Nil returns

You do not need to submit a nil return.

However, you may choose to tell HMRC that you have no reportable persons to include.

Filing dates

This example relates to the 2028 to 2029 tax year. Filing dates for other years follow the same cycle.

Date	Event
6 April 2028	UK tax year begins.
5 July 2028	The first quarter ends. The return is due 21 calendar days later.
5 October 2028	The second quarter ends. The return is due 21 calendar days later.
5 January 2029	The third quarter ends. The return is due 21 calendar days later.
5 April 2029	UK tax year and the fourth quarter end. The return is due 21 calendar days later.

For interest reported at an annual frequency, the filing date is also 21 days after the end of the tax year.

Due diligence

The reporting regulations require the reporting financial institution to verify the information given to it by its customers so that HMRC can use it reliably.

This obligation applies to:

• the customer’s name
• primary address
• National Insurance number (NINO)
• date of birth

All of these should be verified in line with pre-existing Know Your Customer information, except for NINOs, which have a separate procedure outlined below.

Failure to verify this information could lead to a penalty being charged.

National Insurance numbers (NINOs)

We expect reporting financial institutions to ensure the NINOs they collect from their customers are in the correct alphanumeric format — for example, 2 letters, 6 numbers and a final character of A, B, C or D.

You should take steps to address cases where a customer provides a NINO during sign-up that is clearly in an incorrect or a ‘dummy’ format. This includes a NINO that follows the correct alphanumeric pattern but is unlikely to be valid, such as AA123456A, or where there is reasonable doubt about the reliability of the NINO provided.

For joint accounts, the NINO will need to be obtained for all reportable individuals.

Collecting NINOs for new accounts

As part of the onboarding process for new customers, you must request the NINO or obtain a declaration from the customer that they do not hold a NINO.

If the customer is eligible but does not have a NINO when opening an account, they may open the account, but you have 45 days to obtain the NINO from them. If the NINO is not provided within 45 days, you should consider account closure or freezing.

In the scenario that an individual is ineligible for a NINO but has a savings account, the financial institution should provide the information (designatory data) they are able to, i.e. without a NINO.

Collecting NINOs for existing accounts

We expect you to make ‘reasonable efforts’ to obtain the NINO for existing accounts.

Reasonable efforts mean you must contact customers once a year for the first 2 years of the new reporting obligations. If, after 2 attempts, you are unable to obtain the NINO or other missing identifying information, such as the customer’s name, date of birth or address, we would only expect further attempts when you update your Know Your Customer checks.

Keeping records

You must keep the following records for 5 years after the end of the relevant reporting period:

• information you have collected and verified
• evidence of the steps taken to meet the due diligence requirements
• copies of submitted XML files, as HMRC cannot provide replacement copies

Categorising account holders

When you make your return, you must correctly categorise the account holder to whom interest is paid or credited by account type:

• individuals
• non-individuals

The legal owner of an account is normally the beneficial owner of the funds in that account. In that case, they are categorised as an ‘individual’ and are:

• entitled to the interest
• liable for any tax on that interest

However, in some cases the account owner is not the beneficial owner and should be classed as a ‘non-individual’. This ensures that they do not receive an incorrect tax charge.

Representatives

If interest is paid to an individual account owner acting as a representative, you should categorise them as a ‘non-individual’. They are not the beneficial owner of the account, and they should not pay tax on the interest.

The account name may help you identify whether the owner is acting in a representative capacity. The following sections provide more information about categorising account holders who act as representatives:

• trusts
• charities, clubs, entities, and organisations
• deceased investors

Example 1

Scenario	Mrs T Briant, secretary of Neame Chess Club, opens an account named “Mrs T Briant, Neame Chess Club Secretary” to hold the club’s funds.
Account holder category	Non-individual.
Reporting treatment	Report Mrs Briant in her representative capacity for Neame Chess Club.
Reason	Reporting her as an individual could match the interest to her personal tax account and result in an incorrect personal tax charge.

Example 2

Scenario	Mr S Clark acts as personal representative after Mr B Jones dies. He opens an account named “Mr S Clark as Personal Representative of Mr B Jones,” and interest is paid or credited to it.
Account holder category	Non-individual.
Reporting treatment	Report the interest against the account holder in their representative capacity.

Partnerships

The term ‘partnership’ includes ordinary, limited liability and limited partnerships.

Different reporting scenarios may occur depending on the information you hold relating to the partnership.

All partnerships are reported in the same way:

• account name: name of the account
• participant name: name of the partnership

Designated and undesignated partnership client accounts

Some partnerships, such as solicitors, often hold money on behalf of their clients.

A ‘designated client account’ is one opened to hold funds on behalf of a specific client. You should report interest as paid to your customer’s client as an individual if:

• the interest from this account is passed on to the client
• you hold the client’s details

Example

Account type	Y
Account name	Spencer Solicitors (Mrs E Childs)
Account participants	1
Reportable participants	1

An undesignated client account (a general client account) is used to hold funds on behalf of several clients. In these cases, report the interest as paid to a non-individual.

Example

Account type	N
Account name	Spencer Solicitors (client account)
Account participants	1
Reportable participants	1

Where practicable, give designated and undesignated client accounts names that reflect their purpose. This will help HMRC distinguish between the 2. Report the account holder as a non-individual.

Example

Account type	Example account name
Designated client account	Spencer Solicitors (Mrs E Childs)
Undesignated client account	Spencer Solicitors (client account)

Even if you suspect that interest paid was not passed on to the client, you should still include it on your return.

HMRC will make enquiries directly with the customer if necessary.

Designated client accounts and undesignated client accounts should not be confused with designated accounts (specifically accounts that enable investments to be bought by an adult and designated in the name of a child).

Trusts

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

Categorise the account holder as a ‘non-individual’ on your return if they are identifiable as a trustee.

If interest is paid directly to a beneficiary, then they would be reported in the normal way as an individual account holder.

Charities, clubs, and organisations

Categorise the account holder as a ‘non-individual’ on your return if they are acting as either the:

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

Joint account holders

A joint bank account can have more than one account holder, although most have 2.

A joint account is reportable if at least one account holder is a reportable person. Include all reportable joint account holders in the return or, if this is not possible, include as many as practicable.

Including all reportable joint account holders helps HMRC match the information to the correct customer accounts.

Always report the full amount of interest paid on the account.

Change in account ownership during the tax year

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

• from a sole account to a joint account because its use changes
• from a joint account to a sole account when one of the account holders dies

If the account holders change during the year, you should report the account holder at the end of the reporting period as having received all the interest paid.

Example 1

Scenario	On 1 May 2028, a joint account for Mr and Mrs Smith receives £20 interest. On 1 August, it becomes a sole account for Mrs Smith. A further £20 interest is paid on 1 November 2028.
Reporting periods	The first payment falls in quarter 1 of the 2028 to 2029 tax years and should be reported by 26 July 2028. The second payment falls in quarter 3 of the 2028 to 2029 tax year and should be reported by 26 January 2029.
Reporting treatment	Quarter 1: Report Mr and Mrs Smith as the 2 participants and report the full £20 of interest against the account. Quarter 3: Report Mrs Smith as only participant and report the full £20 of interest against her. The year-to-date figure will be £40.

Example 2

Scenario	On 1 May 2028, a sole account for Mrs Jones receives £20 interest. On 1 June, Mr Jones is added as an account holder. A further £20 interest is paid on 31 January 2029.
Reporting periods	The first payment falls in quarter 1 of the 2028 to 2029 tax year and should be reported by 26 July 2028. The second payment falls in quarter 4 of the 2028 to 2029 tax year and should be reported by 26 April 2029.
Reporting treatment	Quarter 1: Report Mr and Mrs Jones as the 2 participants and report the full £20 of interest against the account Quarter 4: Report Mr and Mrs Jones as the 2 participants and report the full £20 of interest against the account, The year-to-date figure will be £40.

If your systems allow, you may instead report the interest paid before and after the change in ownership separately.

Deceased account holders

Interest becomes chargeable to tax when it is paid or credited to the account and is accessible.

For an individual to be chargeable, they must have received the interest or benefited from an entitlement to it.

Account holder is alive when interest is paid or credited

The account holder will receive or benefit from an entitlement to the interest. This means they are chargeable and you should report them on your return.

Account holder dies before interest is paid or credited

The account holder will not have received or benefited from an entitlement to the interest. This means they are not chargeable.

From the date of death, the personal representative or executor will receive the interest or benefit from an entitlement to it. This means they are chargeable.

Where account ownership changes, you may report the account holder at the end of the tax year as having received all the interest paid during that year. If your systems allow, you may instead report the interest paid before and after the change separately.

However, because they are acting in a representative capacity, they should be categorised as ‘non-individual’.

This will prevent:

• the interest from being wrongly treated as personal income of the personal representative or executor
• tax being incorrectly charged on them personally

Example

Scenario	Mr B Smith dies on 28 February. Interest is paid into his account on 31 March, after the bank has been notified of his death and has renamed the account ‘The Executor of Mr B Smith (Deceased)’.
Account type	N
Account name	The Executor of Mr B Smith (Deceased)
Reporting treatment	Report the interest against the account holder in their representative capacity.

Report interest paid or credited during the period of executorship in the reporting period to which it relates.

Joint accounts when one account holder dies

If both account holders are alive on the date interest is paid or credited to the account, they are both chargeable. It is reasonable to assume a fifty-fifty split.

If one account holder dies before the date the interest is paid or credited to the account, the surviving account holder is chargeable.

Accounts opened by individuals acting as personal representatives

In this case, you should strongly advise customers to name the account, so it is clear they represent another person.

Otherwise they could be personally chargeable to tax on interest paid or credited to that account.

Late notification of an account holder’s death

If you are not immediately informed of a customer’s death, you should make your return based on the facts known to you at the time.

The interest you report depends on both:

• when the account holder died
• when the interest was paid or credited to the account

A UK bank may pay interest on an account that it also holds in its capacity as executor. Read the section on ‘Joint account holders’ if there is more than one executor.

Executors should only report interest they have been paid or credited, once they have assigned the assets that gave rise to it to a beneficiary who is a reportable person.

You should only report interest paid from the date those assets were assigned to that beneficiary.

Addresses

Reportable addresses are addresses that are in the UK, unless the financial institution has self-certification from the customer of their UK tax residency.

Scenario 1	A customer has a UK addres. Action: this is a reportable person; the financial institution should complete their due diligence requirements and report the data.
Scenario 2	A customer has provided a UK address to the financial institution, but they are not a UK tax resident as declared in their self-certification. Action: this is not considered a reportable person. The financial institution is not required to provide this information to HMRC.
Scenario 3	A customer has provided the financial institution with an address outside the UK; however, the customer has declared UK tax residency in their self-certification. Action: this is considered a reportable person; the financial institution should complete due diligence and report the information to HMRC.
Scenario 4	A customer has provided the financial institution with an address outside the UK; however, their self-certification declares them a tax resident outside the UK or the financial institution does not have a self-certification for the customer Action: this is considered a non-reportable person, the financial institution does not have to provide this information to HMRC.

Report the address held in your records at the end of the reporting period.

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 included or excluded any payment or credit of interest from your return
• that the addresses you reported, or did not report, are the addresses of the people or entities to whom interest was paid or credited

Account holders with more than one address

Individuals

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

Non-individuals

You should include the address relevant to the type of non-individual in the return. For example, for a company, you should include the registered office. If you do not hold this, a correspondence address is acceptable.

For example, you do not hold the registered office address of a company, but you think it may be a French company. The only address you hold from your Know Your Customer information is a UK address, so you must include the interest paid to that company on your return.

‘Gone away’ and dormant accounts

Include the last known address in the return if an account is marked ‘gone away’ when the return is prepared and interest has already been paid or credited. This should be a UK address.

If an account is dormant for at least 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 previously reported in the tax year in which the owner comes forward to reclaim the money.

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 and ‘care of’ addresses

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

In general, a British Forces Post Office address or a ‘care of’ address is not a residential address. It is treated as a correspondence address.

Where a customer provides one of these addresses, you may need to make further enquiries to confirm whether it is their residential address.

British Forces Post Office addresses

If a British Forces Post Office address is the only address held on file at the time of reporting, report the account details and that address, regardless of whether the address is in the UK or overseas.

‘Care of’ addresses

If a ‘care of’ address is the only address held on file at the time of reporting, you may accept it as the account holder’s residential address if it contains enough detail to identify the location clearly, such as:

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

If it is a UK address, report the account using that address.

If it is a non-UK address, do not report the account.

If the address does not contain enough detail to identify a UK or non-UK residence clearly, continue to report the account until the customer confirms their residential address.

Foreign currency accounts

Interest paid on a foreign currency account should be reported either in the foreign currency or in sterling. You must use a consistent currency format throughout your return.

Sharia accounts

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

Definitions of ‘alternative financial returns,’ including accounts compatible with Sharia law, are covered in paragraph 12 of Schedule 23 to the Finance Act 2011.

Bankruptcy and insolvency

The interest should be reported if the payee is a ‘reportable person’.

Penalties

Under paragraphs 7 to 12 of Schedule 23 to the Finance Act 2026, HMRC may charge the following penalties:

• Failure to notify: up to £1,000
• Failure to provide information or data to HMRC on an ongoing basis:
  • up to £5,000 initially
  • up to £600 for each additional day the return remains outstanding after the initial penalty
• Failure to apply due diligence procedures: up to £100 for each person or account affected
• Failure to keep or preserve records: up to £5,000
• Submitting an incomplete or inaccurate return: up to £100 for each customer affected

You should take reasonable care when preparing your return and should not submit information you know to be incorrect.

Example – Inaccurate or Incomplete Information (Careless)

A data supplier submits a return containing 1,000 seller records. Approximately 20% of the records contain incomplete address information. For those records, only the city element has been provided.

The inaccuracy arose from careless behaviour and this is the first occurrence of inaccurate or incomplete information. The case worker will usually consider this information when making an assessment or determination of the penalty amount.

The data supplier corrected the information within 30 days, co-operated with HMRC and provided access as required. The disclosure was prompted and the proportion of errors exceeded 10%.

The caseworker will usually take these facts and circumstances into consideration which may reduce the final penalty amount.

Corrections

If you discover an error after submitting your return, you must tell HMRC immediately. This may help reduce any penalty.

HMRC can then advise you on the appropriate corrective action.

You should also provide account holders with documentation containing the correct information.