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Tax Evader without even knowing it?
timydog
Posts: 13 Forumite
This post is on behalf of a friend who cannot use the internet, but wants to ask the question.
Right, been going through my P60's and my savings interest tax certificates for ther past 15 years, i have all for all!;)
For the past 15 years, i have never owned a house (council house), never had any investments other than savings in savings accounts in the UK. I have only ever worked as a permanent employee for the same company, so PAYE, never submitted a tax return, never been asked to? Now my compnay pay has always been set at a salary, i get paid no overtime, no bonus, but luckily for me, my salary has always sat just under the 40% tax bracket, so this year i will earn around 39k, so i only pay 20% tax on my earnings. I move my savings around alot, a very lot, but always request a tax paid certificate. Lokking back now, for the past 15 years, there is only a couple of years, i have not exceeded the 40% tax on my savings, By this i mean, combined my earnings and savings, i should be paying 40% tax on my savings interest, but i have not, never thought, but ignorance is no defence.
My question is, why have the HMRC never got in touch, i have got away with it for 15 years, this year i owe about £800, altogether combined years, about 10k at a guess, i copuld go to jail, but if i had not checjked i would not have known. I never thought about it until i read a thread on here. 15 years, who would ahve thought about it hey. Is anyone else been in my position, would you just leave it or do something, its just i am 55 now, might retire soon, what would you do?
Right, been going through my P60's and my savings interest tax certificates for ther past 15 years, i have all for all!;)
For the past 15 years, i have never owned a house (council house), never had any investments other than savings in savings accounts in the UK. I have only ever worked as a permanent employee for the same company, so PAYE, never submitted a tax return, never been asked to? Now my compnay pay has always been set at a salary, i get paid no overtime, no bonus, but luckily for me, my salary has always sat just under the 40% tax bracket, so this year i will earn around 39k, so i only pay 20% tax on my earnings. I move my savings around alot, a very lot, but always request a tax paid certificate. Lokking back now, for the past 15 years, there is only a couple of years, i have not exceeded the 40% tax on my savings, By this i mean, combined my earnings and savings, i should be paying 40% tax on my savings interest, but i have not, never thought, but ignorance is no defence.
My question is, why have the HMRC never got in touch, i have got away with it for 15 years, this year i owe about £800, altogether combined years, about 10k at a guess, i copuld go to jail, but if i had not checjked i would not have known. I never thought about it until i read a thread on here. 15 years, who would ahve thought about it hey. Is anyone else been in my position, would you just leave it or do something, its just i am 55 now, might retire soon, what would you do?
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Comments
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You only have to do tax return if you are deemed to be high rate earner (think thats above 40k a year) or you are a company director etc.
Earnings - basic rate 10%, then 20% to 37k, anything above that is 40%.
Savings - everyone pays 20% on all bank accounts unless you are a child.
So no your friend hasn't got away with anything - any overpayment or underpayment in earnings is usually corrected in the next years earnings PAYE/NI payments.0 -
You only have to do tax return if you are deemed to be high rate earner (think thats above 40k a year) or you are a company director etc.
Earnings - basic rate 10%, then 20% to 37k, anything above that is 40%.
Savings - everyone pays 20% on all bank accounts unless you are a child.
So no your friend hasn't got away with anything - any overpayment or underpayment in earnings is usually corrected in the next years earnings PAYE/NI payments.
Savings interest combined with earnings can take you over the highlighted above, but has never paid 40%. Never asked to, never knew till now.0 -
Yeah but HMRC know how much has been paid for earnings and savings (thats the way I know it) and your tax allowance changes to reflect that - so if you owe any money, they get through your next year allownace being lower.
See here http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnSavingsAndInvestments/DG_4015739
Not explaining it too well but it helps.
And from the way I have known it - my circumstances changed a couple of times and I was asked to fill tax returns. Otherwise you have to let them know but usually HMRC know the figures and if they suspect that you are high band, they will want a tax return to be filled which declares your savings interest - and they can then claw back money through that.0 -
luckily for me, my salary has always sat just under the 40% tax bracket, so this year i will earn around 39k, so i only pay 20% tax on my earnings.
First of all you need to remember that the first £6475 is tax-free (for this tax year). Income above £37,400 is taxed at 40% but you have to add the £6475 to that. So basically if your combined gross savings and earnings exceed £43,675 then some tax at 40% will be due.
Are there any pension payments being made? That will reduce the taxable income and may be enought to take you back into basic rate.My question is, why have the HMRC never got in touch,
It is your responsibility to inform HMRC if you think you may be due to pay extra tax.what would you do?
I would contact HMRC.
However you need to check your figures as mentioned above.0 -
Yeah but HMRC know how much has been paid for earnings and savings (thats the way I know it) and your tax allowance changes to reflect that - so if you owe any money, they get through your next year allownace being lower.
They can do that but only if you inform them in the first place.0 -
You only have to do tax return if you are deemed to be high rate earner (think thats above 40k a year) or you are a company director etc.
Not always. There are lots more reasons;
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/SelfAssessmentYourTaxReturn/DG_4017116Earnings - basic rate 10%,
10% doesn't exist anymore and hasn't for over a year. Only exists for savings income where your earnings are less than the personal allowance plus the 10% savings band.then 20% to 37k, anything above that is 40%.
Remember that is taxable income - you have to add on the personal allowance.Savings - everyone pays 20% on all bank accounts unless you are a child.
Unless you are a non-taxpayer, a higher rate taxpayer or someone entitled to the 10% savings band.So no your friend hasn't got away with anything - any overpayment or underpayment in earnings is usually corrected in the next years earnings PAYE/NI payments.
Only if the tax code has been adjusted by HMRC who need to know about all income to be able to do this.0 -
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You only have to do tax return if you are deemed to be high rate earner (think thats above 40k a year) or you are a company director etc.
Not quite true - so does anyone who has any form of taxable benefits (0% loan, mileage reimbursement over set levels etc) from their work, or receives money from a trust, or has an old savings account paying gross interest, etc, etc. If HMRC don't send a form and you should be self assessing, you need to ring them up and ask.
It is a prosecutable offence to fail to declare to HMRC that you believe you have underpaid tax0 -
We have spent all afternoon looking at his P60's, his code has never been adjusted to cater for an underpayment the previous year.
So in essence, he has only ever payed 20% tax, on savings interest and PAYE interest, for example, this year ending 05/09, tax and saving interst combined earnt 47k i recon, similar other years, no 40%tax. So will he let the HMRC know, or just leave it. I bet there are loads who never realise they go into the 40% threshold because of savings interest, and the HMRC never realise aswell?0 -
this year ending 05/09, tax and saving interst combined earnt 47k i recon, similar other years, no 40%tax.
I'll assume you mean 08/09 tax year. 40% tax band started at £34,600 plus personal allowance of £6035 so a total of £40,635.
So with an income of £47k then yes 40% tax should have been paid.
Was there any pension payments made that could reduce this?So will he let the HMRC know, or just leave it.
As already said it is a prosecutable offence to fail to declare it to HMRC. He really needs to inform them asap.I bet there are loads who never realise they go into the 40% threshold because of savings interest, and the HMRC never realise aswell?
Maybe maybe not but it's still his responsibility.0
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