I'm not an accountant, but it's when the interest was paid into your account that's matters as it is then income. I.e. if the interest was received during the 2016/2017 tax year then that is when it's liable for income tax in that year.
It's not accounted for pro-rata. So on the 660 income you use the whole of the 500 saving allowance and then the next 160 is at 40% tax.
Welcome to the world of investing, this is how income from dividend and interest payments for peer to peer related investment is handled as well.