Client Account 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 of interest 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 when depositing the money we hold on your behalf yourself. 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 payable by us.
We align our interest rates paid on monies held on general client account to the Bank of England base rate. This rate is likely to change from time to time.
Where amounts are held outside of a general client account the rate of interest and date that interest is credited will depend on the relevant institution where the funds are held, and as such fall outside the requirements of this policy. The relevant interest information can be obtained at your request.
Where your money is held on our general client 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 interest received from us and the implications of this will depend upon your own financial circumstances.
Designated deposit accounts are not ordinarily opened in the normal course of business. Should you require us to open one, then upon your request we will notify you of the applicable interest rate and our charges for administrating the account.
Until 5 April 2016, where money is held on a separate designated deposit account interest is usually paid net of tax (unless you have signed a declaration confirming your entitlement to receive bank interest gross). Following the 2015 Pre–Election Budget announcement from 6 April 2016 interest will be paid gross.
Under the European Savings Directive regulations 2003/48/EC we are required to inform HMRC of payments of interest to relevant payees and residual 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 interest to HMRC directly and pay you the net amount.
On monies held in our general client account, interest will be calculated from the time the funds become cleared for interest purposes, on cheques or banker’s drafts this will be 3 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 days after the transaction has been authorised. For direct transfers or same day payments the funds become cleared on the day of 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 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:
£1,000 8 weeks
£2,000 4 weeks
£10,000 2 weeks
£20,000 1 week
Interest will not be paid if the total amount calculated for the period that cleared funds are held is less than £50.00.
Interest is usually calculated at the end of the matter and will credit the client ledger at that date.
Interest rate table