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What is correct account to tag withholding tax for bank account interest?


#1

A foreign bank pays interest to my bank account and deducts a withholding tax form the interest income.
What account should be used to tag these entries?
(Values are usually very low, monthly, the interest income is about 0.054 GBP and the withholding tax paid is 0.008 GBP)


#2

There won’t be a perfect nominal code for this so I would suggest creating a new one. You can create a new nominal code from the Chart of Accounts screen, the following should work:


#3

Would it be assets and liabilities or would it be an expense (even if it’s something you could conceivably reclaim from the foreign authorities the cost of time and postage seems it wouldn’t be worth doing)?


#4

Most tax liabilities go on the balance sheet first and are cleared from the P&L later.

In this particular case the amount is immaterial and I believe Withholding tax only needs to be reported over a certain threshold (> £1 a month, but don’t quote me on that). I think here you’d be fine to just report the net figure.