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Interest on Client Funds
Where we hold money on behalf of a client, we pay interest on that sum to the client in accordance with the Law Society's rules. These rules were updated and tightened in 1998, and again in 2000.
We will pay interest on to you when it exceeds £20.00p. If you think it may have done so, please feel free to ask us to check it for you.
Our interest calculations are made on the daily cleared balance held by us, and in some ways this might provide a very slightly larger payment than would normally be prescribed by the Law Society Rules.
No payment is due where the total sum of interest due to you is less than twenty pounds sterling, and we may also make a charge for making the calculations required in this process - calculating interest on a shifting balance is not the work of a few moments.
It is important to recognise also that our payment to you is made gross, and without deduction of income tax. This is entirely proper, but it means that, if you are liable to pay income tax, you will have to make arrangements to pay tax on the sum received from us. You will see the appropriate box on your tax return.
You should therefore keep a note of the sum received and declare it on your next income tax return.
We are required by the Inland Revenue to provide to them each year a schedule of all the payments we make in this way, and identify to them who has received the sum. You will appreciate that, particularly if the sum is of a larger amount, they will seek to tie it up with your own tax return. You will appreciate also that this is another infringement of the rule that a solicitor must keep his client's affairs confidential.
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