2 min read
Definition
The gross rate is the contractual interest an account pays before tax and before the compounding adjustment that produces the AER. For most limited-company accounts interest is now paid gross, with corporation tax handled through the company’s return rather than deducted at source.
In plain terms
It is the raw rate on the label. To know what you will actually have at year end, you need the AER (for compounding) and your tax position (for what you keep).
Why it matters for your company
Compare business savings on AER for growth and factor corporation tax on the interest into your planning. Interest received is taxable income for the company — see the corporation tax calculator.
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