Failed to declare small amount of P2P earnings. What should I do now?

2

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  • Bravepants
    Bravepants Posts: 1,502 Forumite
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    Thanks for that clarification bowlhead99. I think the confusion initially arose from the suggestion that because a person is on PAYE through their employer they then "do not do self-assessment" and so there was the assumption that there is no way for someone to report the income from interest. But that is not actually how it works. If one receives interest that is not taxed, then you DO do a self-assessment, fill in the form, provide tax statements from P2P or savings product providers and submit your P60 to take into account the PAYE portion of your tax.
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
  • surreysaver
    surreysaver Posts: 4,095 Forumite
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    Malthusian wrote: »
    If you have more than £1,000 in P2P and other savings income, then do one.

    Why......?
    I consider myself to be a male feminist. Is that allowed?
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
    Good question!
  • Bravepants
    Bravepants Posts: 1,502 Forumite
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    Dazed_and_confused wrote: »
    Good question!

    I think Malthusian's is correct, you're just mis-interpretting the statement:

    "If you have more than £1,000 in P2P and other savings income, then do one."

    Perhaps a slight re-write?...

    If you have more than £1000 of income from P2P and other savings, then do one.
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    Bravepants wrote: »
    I think Malthusian's is correct, you're just mis-interpretting the statement
    If you have more than £1000 of income from P2P and other savings, then do one.
    I think what they mean is, if you don't need to do a full tax return, why do one?

    If you don't have complex tax affairs and your salary is going PAYE, so the only thing you need to tell HMRC about is the p2p interest and savings income, you can just tell HMRC the number in writing, without doing a tax return.

    Also, even if you do do a tax return, it is a *self* assessment of what income you had and what tax you need to pay. You don't need to submit your p60 or any statements from p2p providers or bank accounts to prove that the numbers are correct, unless HMRC decide they disbelieve your numbers or pull your name out of a hat for a random audit and specifically want to see some supporting documentation.

    So, you can change your
    If one receives interest that is not taxed, then you DO do a self-assessment, fill in the form, provide tax statements from P2P or savings product providers and submit your P60 to take into account the PAYE portion of your tax.
    to
    If one receives interest that is not taxed and the total gross interest for the year is over your £500 or £1000 personal savings allowance and the 0% starting rate for savings interest, then tell HMRC how much interest you received
    A tax return is not required for people who don't have complex affairs and even if you are doing a tax return you don't need to send P60s or bank statements or p2p printouts.
  • Bravepants
    Bravepants Posts: 1,502 Forumite
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    OK. I had assumed that HMRC would prefer supporting documentation, as otherwise the whole process seems a little ad hoc and informal.

    Doing it formally once a year, and getting into the habit, is better than doing it informally for several years and then ending up becoming the subject of an audit and having to scramble around to find all the paperwork.
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
  • coyrls
    coyrls Posts: 2,431 Forumite
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    Bravepants wrote: »
    OK. I had assumed that HMRC would prefer supporting documentation, as otherwise the whole process seems a little ad hoc and informal.

    They don't need you to provide supporting documentation because they already have access to the information.
  • jennyjj
    jennyjj Posts: 346 Forumite
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    coyrls wrote: »
    They don't need you to provide supporting documentation because they already have access to the information.
    Don't overestimate what HMRC have access to, know, or care about. Each is far less than they would have you believe.
    For example, generally, a limited company pays dividends and pays some Corporation tax and maybe sends some VAT to HMRC's coffers. Directors of that company do self assessment and MAY be recipients of SOME of those dividends.
    However, unless HMRC do a drains up, they never ask the company who the dividends were paid to.
    So, Director of company has dividends paid to spouse and those dividends might be over a reporting threshold. Unless the spouse tells HMRC, they are none the wiser. Spouse might be receiving megabucks, but simply not be on the radar.
    This is not to say I'd encourage fraud, but the overworked and underpaid HMRC workforce very much runs the whole system on a sniff-test and random check process.
    Some idiots, and/or legitimate businesses report a loss every year and HMRC send them money. Whiffy!
    Some idiots, and/or legitimate businesses claim more in VAT rebates than they ever hand over to HMRC. Whiffy!
    Some individuals, for whatever reason, never pay a bean in PAYE or self assessed income tax. Whiffy!
    Some households receive massive 'benefits' and none in that household ever pays a bean in paye. Whiffy!
    Those above might fail the sniff test and go into a pool of ' Lets random check these aggressively'
    But if you are not one of the above and you maybe pay a few quid by PAYE or your company pays a decent percentage of turnover as Corporation Tax, then you fall into ' These guys seem legit, lets not bother too much' by HMRC.
    There are enough businesses and individuals that are absolutely blatantly taking the Mickey, that HMRC don't need to or care to go fishing among the rest.
    HMRC like any other business won't mess about if there is low hanging fruit. And there's always low hanging fruit.

    Yes, if you receive over the limit interest and should tell the taxman, then either volunteer for self assessment, or just send them a simple letter. They are EXTREMELY unlikely to penalise in any way for 10 quid or even 100 quid here or there. At worst they might assume you receive similar amounts in future years, long after you stop getting it. OK. Technically, at worst they might impose a modest percentage penalty for carelessness, but they won't waste their own time to make your life hard over a few quid.
  • coyrls
    coyrls Posts: 2,431 Forumite
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    Yes, I understand but they still don't want people sending in their P60s, as they do have access to that information. You're right that they may not routinely cross reference data but they are able to if they choose to take an interest, that's why I used the word "access"; it's there if they want to get it.
  • aroominyork
    aroominyork Posts: 2,821 Forumite
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    Is tax payable in the year it is earned or the year it is received? I have just loaned through a one year p2p Ratesetter so (unless it is redeemed early) I will receive the interest in 2018-19. Does I have to declare anything this financial year, or only next year?
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