Interest on uninvested funds

šŸ¤ Help
1

Iā€™ve just seen the new T&Cs saying T212 may put your uninvested funds in to a bank account. They will share any interest they get from this but also you will share the risk e.g. if the bank goes bust you may lose some money.

Can anyone help me with some questions please?

  • Can we opt out of this if we donā€™t want it?
  • Is there an easy way to see the interest earned e.g. can you filter like you can with dividend?
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The T&C say you can opt out of interest payments, but why would you?

Risk wise - why do you think it will be any different to current protection of your uninvested cash, where is the higher risk?

It also says interest will be paid daily and on your statement.

Maybe read the T&C again just incase I read them wrong?

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However, if you do not wish to receive the interest, you may inform us and we will discontinue its payment to you. In such a scenario, although you have opted out of receiving interest on your Uninvested Money, you hereby agree that we may still deposit your Uninvested Money in accordance with Clause 14.1 above and we will retain all interest.

You can opt out of receiving interest but not opt out of your money being deposited into interest bearing accounts.

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4

Welcome to the Community, @Sam4! :tada:

Yes, youā€™ll be able to do that. The feature is not enabled yet, but once it is live, you will be able to opt out of receiving interest via a section in your accountā€™s menu.

As @Dougal1984 mentioned, the interest will be credited to your account automatically at the end of each Business Day and reflected on your periodic Statement.

In the unlikely event Trading 212 or the bank holding your client funds were to go into liquidation, and if there was a failure to safeguard your assets, the value of your funds and assets held with Trading 212 are still protected by the applicable compensation scheme.

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Where can we see the current interest rate? Email says on fees page of website but it is not there.

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Thank you all for your help

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The changes on T&C states (current) rates for USD, GBP and EUR. 0.8% on EUR, and some 1.5~% on USD GBP (i think GDP slightly lower than USD)

8

If the interest earned on the cash balance within an Invest account is received pre-taxed, then this wonā€™t need to be factored into a (Ā£1000) PSA?

Is that correct?

(Normally, I make sure my (always untaxed) annual interest stays under the 1000 to keep things simple)

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9

Another question if anyone knows: will the interest be paid monthly? I assume so but donā€™t see it anywhere it says this.

Edit: ignore this I see earlier in this thread it will be credited end of each business day which is great.

10

I would say yes it counts towards the Ā£1000 allowance but looking at HMRC guidelines it states the following places is where interest comes from that counts towards the allowance, now the question is which category would interest from T212 come under? Anyone know as it isnā€™t clear to me which category it would be under.

Interest covered by your allowance

Your allowance applies to interest from:

  • bank and building society accounts
  • savings and credit union accounts
  • unit trusts, investment trusts and open-ended investment companies
  • peer-to-peer lending
  • trust funds
  • payment protection insurance (PPI)
  • government or company bonds
  • life annuity payments
  • some life insurance contracts
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Good point re. which category: I really couldnā€™t say!

I would say yes it counts towards the Ā£1000 allowance

So if, for example:

  • Ā£700 untaxed interest is earned from various savings providers
  • Ā£600 taxed, so Ā£480, is earned in the 212 Invest account

That takes you over the PSA, by 180, despite the 480 being post-tax?

Thatā€™s annoying!

Surely the 480 should be disregarded re. PSA as itā€™s already the result of taxationā€¦

12

I see what you mean but I guess a lot of this is a mute point for many as:

  • most would hold cash inside an ISA
  • you would need a ton of cash outside of an ISA to get that kind of interest
  • you could probably get better interest rates for various amounts at a bank
  • even if you had a ton of cash you could invest in super low risk CSH2 for instance to get 3% return vs 1.5% on T212 as cash.

I think itā€™s best to look at it as a little extra cash on the side but not an actual plan for holding it longer.

13

Did anyone notice the new T&Cs yesterday? Is T212 actually going to start paying interest on uninvested funds now? Can anyone from @t212 confirm how this is going to show up and all.

14

If they really credit it daily that would be fantastic!

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15

Yeah getting it daily would be great stuff. :+1:

16

If you are an Invest account holder, regardless of your tax residency, we will automatically withhold 20% tax from the interest owed to you, which is then paid to the UK tax authority (HMRC).

Šll the relevant information will be displayed in a detailed section in the app and the web-based version. Yet, we will update the thread once it is live.

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17

If you need beta testers to test interest on cash - let me know. :money_mouth_face:

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Well thatā€™s not great. I have no taxes on interest income :grimacing:

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Why is T212 paying that tax to HMRC, why take that approach?

Iā€™m sure thereā€™s a good reason, interested to know why.

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I suppose the paid interest and the withhold taxes will also show in a yearly tax statement?

Do you know when the interest paying scheme will be live?