Lottery winnings are tax free, what about the interest earnt from this win?

Ignore the first few answers. The interest is wholly taxable and will form part of your total income. In addition to the 20% deducted at source, you will pay higher rate tax at 40% on your total income, after allowances and lower rate band, on all income over £33,000 in the current year. You will of course receive a credit for the tax deducted at source.

Yes you would Although the winnings is tax free thats your lot!! All interest that takes your earnings (however you get that income - including interest on bank accounts) above the 27,5k threshold attracts 40% tax. So the bank assumes you are not one of those and deducts normal tax off of your interest at source. However, you will have to pay the difference between that sum automatically deducted and 40% of the total on every pound earned over £27,5 k a year (That figure higher rate figure may be a bit higher now like 28.5 k, but you get the idea) The only tax free investments are the ISA's which is a fixed amount annually (£7k i believe) per individual, so you could put £14k per annum away out of reach of the taxman at all if you put £7k in your name and £7k in your partners name. You can do this each year, and curiously enough, no matter how big this becomes accumulatively over the years - it is still free of tax.

I wouldn't stay awake worrying about it if i were you, your so much more likely to get run over by a bus, than you are winning the lottery.sorry!

you;ll have to pay capital gains tax (either short term rate, or long-term rate depending upon the holding period of the investment.

Interest is taxable UNLESS it is invested in an IRA or some type of annunity - talk to a tax accountant or a tax advisor!@~

HI, I'm not an accountant, and live in a different country, (Jersey), but I'm preety certain that interest is income.... it is "new" money that you have "earned". Same applies if any of your wages sit in a bank account long enough to earn interest. Yes it's unfair, yes it's double-taxation, but that's life. Sucks, don't it? Enjoy?????