Being of modest means, and always having been on PAYE and never seen a tax return in my life, maybe someone (everyone else) here knows the answer.
I think this year will be the first time I will go over, after all allowances, the point at which I have to pay some tax on my savings interest.
Do I have to proactively contact HMRC is some terrible online manner and tell them, and does that automatically mean I then have to do a tax return annually forever?
Many websites say that’s what you do.
Or do I do nothing, HMRC get told by the bank, and then they ask me for some money. No doubt to be paid in some ghastly online manner.
Many other websites say that what you do.
They can’t both be right.
What does one do?
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...you'll find the definitive answer here:
www.gov.uk/check-if-you-need-tax-return
(A few simple Q&As)
I'm "in the system", (have been for years) and whilst I dread the submission process (it is tax, after all) the online system isn't particularly onerous (though it can be long winded as it's comprehensive and possibly needs a lot of "n/a") particularly after going through it once, as you can keep your submission for subsequent reference in future years.
It gives you a very quick summary of the tax position, and once "vetted" it is easy to nominate to pay any shortfall through the tax code, or via a one-off. I do tend to do my own calculations via spreadsheet just to check the validity ;-).
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Back in the old days (70s/80s) we had a bank account or to which paid untaxed interest and I think that's one reason why I was stuck with doing tax returns for much of my PAYE worklife, the other being perks like company car and fuel card.
However it's also true that they now get seemingly increasingly accurate returns from the banks etc as I was told more than once that I'd declared wrongly, or missed something off - though IIRC you can split any income 50/50 with your partner.
As T&E says, mostly the annual return isn't too difficult to do online once you have your data to hand.
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Excellent, that wizard thing tells me I don't need to do a tax return. You need 10k or more in interest to trigger it. Mine is nothing like that.
But it does say I need to tell them lesser amounts over one thousand, so looks like I have to be proactive.
I found the HMRC site where people ask questions, and it seemed to me that their officials (one assumes) were giving opposite answers to this kind of question.
Thanks for that.
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For Basic Taxpayers the first £1,000 of interest is tax free
For Higher Rate Taxpayers the first £500 is tax free.
i.e. A Basic rate taxpayer would need £20K saved @ 5% to be over the limit, £25K @ 4%
If you have ISA then the interest is tax free - limit is £20K deposited in 1 financial year
e.g.
Nationwide 5.5% for 1 year fixed - no withdrawals in the 12 months
Nationwide 3.5% for 1 year fixed - maximum 3 withdrawals in the 12 months
Other Banks etc will have different offers and different rates
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For anyone with interest bearing accounts it’s worth keeping an eye on the total value of their deposits. Commercial banks and the like only protect the first £85k in the event the bank or whatever fails. Anyone with amounts over this who is concerned about that risk should consider splitting across more than one bank or opening NS&I accounts which are not affected by the £85k limit.
We are going through this at the moment as my mums house is for sale to pay care home fees and we need her savings to be 100% secure.
Last edited by: martin aston on Mon 7 Aug 23 at 09:31
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Worth mentioning JOINT NAMES you get 2 x £85K = £170K
Go to other banks you can get another £85K for each Bank.
HOWEVER
Beware some banks trade under several names and therefore the limit is £85K
Example LLoyds, Bank of Scotland & Halifax are single entity under the rules so £85K Limit
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...the list(s) of entities covered by a single £85K protection can be downloaded via links contained here:
www.bankofengland.co.uk/prudential-regulation/Authorisations/financial-services-compensation-scheme
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My tax code is adjusted automatically by HMRC, as I earn over the tax free threshold for savings interest. I'm currently putting the max into ISAs each year. I received a nasty shock last year when they sent me a tax demand for previous years. They can apparently go back several years - and they did! I don't recall ever filling in a tax return in my life. Back in the '70s I used to calculate my tax manually and successfully claimed a small amount back a couple of times, perhaps they've long memories and bear a grudge?
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>> My tax code is adjusted automatically by HMRC, as I earn over the tax free
>> threshold for savings interest.
Well, that seems to be the opposite answer to the one at the start given by the HMRC online tool. How bizarre. What's a chap to do!
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Do what many do these days - trust the bloke on the internet over an authoritative source :-)
I've had cause to call them a few times when I was newly retired and they were usually fairly quick to answer and generally knowledgeable about their "products", unlike many call centre people...
Last edited by: smokie on Mon 7 Aug 23 at 12:00
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>..and they were usually fairly quick to answer..
Not in my experience.
I've emailed them numerous times asking to cancel my subscription but they never reply and just keep on taking the money.
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You could put (up to a maximum of £50K) into premium bonds. You may or may not get a better return than investing elsewhere, but any prizes aren't taxed.
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...having replied to this at the time, though I've filled a tax return for years (my tax affairs were once rather more complicated than now) and not found it over-onerous, I resolved to get myself "off the list" as I no longer need to.
I was reminded today when I received a " nudging" email from HMRC letting me know I only have 100 days to submit.
I know things are supposed to be somewhat PC nowadays, but I was surprised to be addressed as "Dear Customer". :-O
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Describing the relationship with HMRC as "customer" is utterly inappropriate - "supplier" (of tax to the Treasury) would be more apposite.
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>>
>>
>> I know things are supposed to be somewhat PC nowadays, but I was surprised to
>> be addressed as "Dear Customer". :-O
>>
I can live with that. It's when the letter is addressed to "Mr O'Reliant" that I start to get nervous.
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...I was rather envisaging the relationship as that Arkwright the Grocer (Open All Hours) had with his "customers". ;-)
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I got the same one, although I removed myself from the taxman's clutches about 7 yrs ago.
Ted
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I too got an email from HMRC , two in fact, about 6 weeks ago just as I arrived in Spain.
Not logged in yet as I don’t know my Gateway access codes ( written down at home)
So something to do when I return home this week.
I assume they want money from savings interest.
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SWMBO and I each had a letter last week telling us they wanted more, but our tax codes would be adjusted so as to repay.
Better than last year, they wanted a substantial sum dating back six years! (the maximum I believe). They wanted it paid by cheque.
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>> ....... They wanted it paid by cheque.
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...made out to their Lagos office...?
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"sum dating back six years! (the maximum I believe).
I thought seven, I also understood that if they found evidence of evasion in whatever the period is, the timeframe became potentially unlimited.
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>> I thought seven, I also understood that if they found evidence of evasion in whatever
>> the period is, the timeframe became potentially unlimited.
Friend/former colleague was chased for a Child Tax Credits overpayment after more than usual 6/7 years. They seem to keep dropping it then it recurs again. She's got lawyers on it now.
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Happy days....logged in to my Govt Gateway Account and I’ve overpaid by £45.00....apparently a cheque is in the post. Can’t they do a BACS Transfer ?
Checked my flights at the same time...LBA > ALC return 2/12 to 23/12. I paid £120 return with Jet2.
Today down to £42 & £38 so £40 cheaper...if only I’d waited. One of life’s coincidences.
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When we came back from the states it took well over 10yrs before HMRC stopped sending me a wad of tax forms about half an inch deep. There was even a supplement wanting details of livestock.
I told them I only kept whippets, ferrets and pigeons to annoy my hoity-toity southern neighbours.
PS. We received a letter yesterday addressed to our forenames+surname but no pronouns. It was from the leader of the Labour party.
I think Maria Miller must have sent Labour HQ her list of annoying voters.
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A lot more people will now fall into the interest taxation trap.
Just 2 years ago interest rates on savings were at best 2% and often less. Rates are now ~6.0%
Two years ago a savings account with £50k may have got close to the £1000 tax free limit.
£50k today would earn about £3k interest of which at least £2k would be subject to tax.
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>> PS. We received a letter yesterday addressed to our forenames+surname but no pronouns. It was
>> from the leader of the Labour party.
>> I think Maria Miller must have sent Labour HQ her list of annoying voters.
They email me as forname+2nd forename. Presume I filled in a field incorrectly at one time.
I guess pronouns are such a minefield now that people avoid them. I certainly do at work. The case recording system allows the field to be blank so I leave it that way.
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Just surprised he was so formal. He doesn't usually send thank-you notes after a dinner party.
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Tax on savings interest - tyrednemotional
