Bank Interest Policy
As part of carrying out your instructions to us, we may need to hold your money in our client account. In holding client’s money, we have an obligation to pay interest on that money at a fair and reasonable rate and are required to put in place an interest policy; this policy sets out the guidelines for when interest will be paid and is summarised below.
We aim to account to you for interest at a reasonable rate. However, as the holding of your funds is incidental to the carrying out of your legal instructions, the rate is unlikely to be as high as the rate you may be able to obtain yourself when depositing the money we are holding. In most cases we must ensure that money held on client account is immediately available and so the need for instant access is taken into account when setting the rate of interest we pay.
Money held on general client account will attract interest at a rate of 0.1%. Any client money held in a designated deposit account will attract the rate applicable to that account and the whole of the interest earned will be paid to you. These accounts are only suitable for longer term deposits. These rates are likely to change from time to time and will be reviewed by us on a quarterly basis or when there is a material change in bank interest rates.
Where your money is held on our general client account or in a Lloyds Bank deposit account, any interest paid to you is paid without any deduction for income tax (unless you are resident overseas – see below). As such it is your responsibility to inform HMRC of amounts of interest received from us and the implications of this will depend upon your own financial circumstances.
Under the European Savings Directive regulations 2003/48/EC we are required to inform HMRC of payments of interest to relevant payees and resident entities in prescribed territories. Where you reside outside the UK and EC, we are required to deduct income tax at the current basic rate and account for this tax to HMRC directly and pay you the net amount.
Interest will be calculated from the time the funds we receive become cleared for interest purposes, on cheques or banker’s drafts this will be 7 working days after the cheque or draft has been deposited with our bank. For amounts received by debit or credit card, interest will start to accrue from the date of the actual receipt, usually 3 working days after the transaction has been authorised. For direct transfers or same day payments the funds become cleared on the day after receipt. Interest will be calculated on a daily basis and calculated on amounts held overnight from the day the funds become cleared for interest purposes.
Interest will not be paid in the following circumstances:
- On money held to pay a professional disbursement, once the intended recipient has requested that we delay paying them.
- If we have agreed with the recipient to contract out of our obligation to pay interest.
- If the total amount of interest calculated for the period that cleared funds are held is less than £20.00.
- If the sum of money held is not exceeding the amount shown in the left column below for a time not exceeding the period indicated in the right column:
Interest will normally be calculated at the end of the matter, in respect of which funds are held, and we will credit the client ledger at the date that we account to you.