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    • Yorkshire Traveller
    • By Yorkshire Traveller 8th Oct 17, 10:08 AM
    • 251Posts
    • 79Thanks
    Yorkshire Traveller
    Declaring Tax on Savings
    • #1
    • 8th Oct 17, 10:08 AM
    Declaring Tax on Savings 8th Oct 17 at 10:08 AM
    Since the introduction of the £1000 tax free savings allowance any interest that I've received on my accounts has had no tax deducted at source. I know that I now need to report this interest to HMRC and pay the appropriate tax. I was sort of expecting to receive a reminder from HMRC to do this (for the 2016-17 tax year) but I guess this is not the case, so I'm going to give HMRC a call next week.

    I have a spreadsheet of all my interest payments received, and will report the amount due accurately. However, as that the banks no longer report the interest paid to HMRC (or do they?) how will HMRC know that the interest that I am declaring is correct?

Page 2
    • chrismac1
    • By chrismac1 10th Oct 17, 8:31 PM
    • 2,469 Posts
    • 1,460 Thanks
    chrismac1
    This new savings band, plus the dividend band, plus various other daft allowances, arises from a combination of two things:

    1. An utterly clueless wally named Gideon George Osborne, plus.
    2. A 1 out of 10 tax service.

    Given that HMRC would really struggle to organise a pizz up in a brewery, and Osborne well knew this, he should never have messed around with this stuff, it was utter ignorance of how HMRC operates in practice that led to it.

    As an example, I have one client who I sent a draft tax return to today with only 3 income sources:

    1. PAYE.
    2. Savings income of £500 or so.
    3. Carer's allowance.

    What could be easier, you would think? The Government pays the Carer's allowance, it gets the PAYE submissions every month from the employer. Easy peasy lemon squeezy his tax code will have added all this up and got the answer right.

    NOT SO!! £2k liability. On the basis that HMRC are already looking like messing up his current year tax code too, I've advised him to get ready to make a payment on account because I have so little faith in the HMRC database to add 1 plus 1 and get 2.

    So £3k to pay by 31 January for someone who would not even be in self-assessment if HMRC could tell its arze from its elbow.

    Now for those newbies to the UK tax system reading this, what you should realise is what happens when this stupid database gets its sums wrong like this for 2 or 3 years then suddenly figures out how idiotic it has been.

    You get a great big bill, backed up by lots of horrible threats about bankruptcy and debt collectors and so on. Even though it all arose because HMRC declared that 1 plus 1 was minus 1.
    Hideous Muddles from Right Charlies
    • realaledrinker
    • By realaledrinker 12th Oct 17, 12:04 AM
    • 1,521 Posts
    • 512 Thanks
    realaledrinker
    Now for those newbies to the UK tax system reading this, what you should realise is what happens when this stupid database gets its sums wrong like this for 2 or 3 years then suddenly figures out how idiotic it has been.
    Originally posted by chrismac1
    Ah yes but that would be based on the situation before all their IT contractors left when they tried to put them on an IR35 basis?
    Ethical moneysaver
    • ricky101
    • By ricky101 13th Oct 17, 10:13 AM
    • 61 Posts
    • 5 Thanks
    ricky101
    Hi,

    Just an add on to this topic, out of the blue received a letter today from HMRC saying that they will calculate any tax due on savings interest earned, stating that I can earn up to £1000 tax free.

    However seems strange that knowing we are non working pensioners, they do not mention the £5000 savings interest allowance ?
    Also no mention about this in any of the comments about Yorkshire Travellers situation ?
    Or have we totally missed the point ?
    https://www.gov.uk/apply-tax-free-interest-on-savings
    • xylophone
    • By xylophone 13th Oct 17, 12:49 PM
    • 23,666 Posts
    • 13,794 Thanks
    xylophone
    https://www.taxation.co.uk/Articles/2017/05/02/336348/tax-relief-savings-and-dividends
    • polymaff
    • By polymaff 13th Oct 17, 2:31 PM
    • 1,806 Posts
    • 781 Thanks
    polymaff
    Hi,

    Just an add on to this topic, out of the blue received a letter today from HMRC saying that they will calculate any tax due on savings interest earned, stating that I can earn up to £1000 tax free.

    However seems strange that knowing we are non working pensioners, they do not mention the £5000 savings interest allowance ?
    Also no mention about this in any of the comments about Yorkshire Travellers situation ?
    Or have we totally missed the point ?
    https://www.gov.uk/apply-tax-free-interest-on-savings
    Originally posted by ricky101
    You'd have to quote that letter verbatim. Then you might receive meaningful analysis.

    As regards your and the OP's circumstances, neither you nor the OP have detailed your income breakdown sufficiently to let us know whether it might be worthwhile broadening the discussion beyond the OP's original, specific, query.

    When it comes to the SRA - at least for 2016/17 - there be dragons
    • polymaff
    • By polymaff 13th Oct 17, 2:39 PM
    • 1,806 Posts
    • 781 Thanks
    polymaff
    2. A 1 out of 10 tax service.
    Originally posted by chrismac1
    You must be becoming mellower in your old age, Chris. I'd make the current level of service -10 out of 10.

    Never mind, EVERYTHING will be fine after that software "fix" that they plan to put online on 23rd October.

    Must be true, this bloke from HMRC told me so.
    • ricky101
    • By ricky101 13th Oct 17, 2:57 PM
    • 61 Posts
    • 5 Thanks
    ricky101
    Hi,

    Apologies if my previous post was not clear enough, it was just a simple question about that 5k saving allowance and why the tax office send a letter out about savings interest, mentioning the 1k allowance of basic tax payers, but nothing about the 5k allowance ?

    Perhaps if I could ask in a different way by means of an example.

    Say in this tax year, someone, non working, with just a state pension of 10k and the personal allowance of 11.5k but has non isa saving interest of 4k, would they have to pay income tax on the 2.5k above the p.a. of 11.5k ?

    According the the Gov.uk link I posted they would not, but they do not give any clear indication if this savings allowance will remain in future years , or as Xylophones link shows the 5k Dividend allowance will drop to 2k next year


    thanks
    • badmemory
    • By badmemory 13th Oct 17, 3:54 PM
    • 1,062 Posts
    • 1,128 Thanks
    badmemory
    No they shouldn't, but it is just another HMRC system whoops which actually normally gets sorted before you (or she) get billed.
    • polymaff
    • By polymaff 13th Oct 17, 4:08 PM
    • 1,806 Posts
    • 781 Thanks
    polymaff
    Say in this tax year, someone, non working, with just a state pension of 10k and the personal allowance of 11.5k but has non isa saving interest of 4k, would they have to pay income tax on the 2.5k above the p.a. of 11.5k ?
    Originally posted by ricky101
    No, first they would get the first £1,500 of taxable savings interest taxed at 0% covered by the remainder of the personal allowance, then they'd get the remaining £2,500 of taxable savings interest taxed at 0% due to the SRA. By the way, they'd still be left with £2,500 of SRA and £1,000 of PSA - so there's another £3,500 of taxable savings interest that would get away with 0%.


    According the the Gov.uk link I posted
    Originally posted by ricky101
    There's your first mistake - trusting anything on GOV.UK. Quite seriously, they are outrageously inept. As for the future - ask me when we get there

    Same answer about the letter - need to see its content.
    • ricky101
    • By ricky101 13th Oct 17, 5:58 PM
    • 61 Posts
    • 5 Thanks
    ricky101
    Same answer about the letter - need to see its content.
    Originally posted by polymaff
    Thanks,

    Unable to load a copy of the letter, seems you cannot load a pic direct and do not use the photo sites etc.

    It was more why they had sent it now, its not as if we have knowingly done anything tax wise to trigger such a letter, equally seems an odd one to just send out a a circular ?

    It just talks mainly about its changes and the only figures it mentions are the 1k and 500 PSA rules
    At the bottom of the letter is references BBSI 1 HMRC 08/2017

    Never knew the gov.uk was so bad !
    • polymaff
    • By polymaff 13th Oct 17, 7:07 PM
    • 1,806 Posts
    • 781 Thanks
    polymaff
    OK with the tax calculation?

    I'd hoped that you might be able to scan and OCR the form. I guess that BBSI stands for Bank and Building Society Interest - a common acronym in tax. Don't look for logic as, I agree, PSA and SRA are all related to BBSI !

    Perhaps it relates to HMRC's continuing inability to process PSA and SRA in online SA100 submissions (or in paper ones - despite their promises)

    It's an Alice in Wonderland world HMRC lives in.

    The White Rabbit promises that it will all be fixed in the "fix" software they're fielding on 23rd October - i.e. over 6 months too late. The bad news is that they now recognise that this "fix" has uncovered 14 more errors - including four which have arisen due to the "fix"ed version itself.
    Last edited by polymaff; 13-10-2017 at 7:16 PM.
    • Mee
    • By Mee 17th Oct 17, 10:07 AM
    • 1,031 Posts
    • 1,007 Thanks
    Mee
    Apologies if this is the wrong place, but have others received a letter (received 16/10/2017) from HMRC re: "Changes to the way we collect tax from your savings interest" blah blah ..."What Happens next "We'll contract you if you have any tax to pay on your savings..".

    dated at the bottom HMRC 08/2017

    ?
    • polymaff
    • By polymaff 17th Oct 17, 11:49 AM
    • 1,806 Posts
    • 781 Thanks
    polymaff
    Thanks,

    Unable to load a copy of the letter, seems you cannot load a pic direct and do not use the photo sites etc.

    ...

    At the bottom of the letter is references BBSI 1 HMRC 08/2017
    Originally posted by ricky101
    Apologies if this is the wrong place, but have others received a letter (received 16/10/2017) from HMRC re: "Changes to the way we collect tax from your savings interest" blah blah ..."What Happens next "We'll contract you if you have any tax to pay on your savings..".

    dated at the bottom HMRC 08/2017
    Originally posted by Mee
    Same? Whatever that letter says, you are ultimately responsible for notifying HMRC of, and for paying the tax on, any taxable income
    • mhoc
    • By mhoc 17th Oct 17, 12:21 PM
    • 16,105 Posts
    • 199,920 Thanks
    mhoc
    I have not actually had a tax coding letter in about 25 years - my only income over that time was the old family allowance, long since ceased.

    I've been carefully keeping an excel chart of my savings interest since the new system came into place.
    My savings are from a small inheritance plus whatever else I've squirrelled away over the years.
    Mostly I've got a few bonds and a selection of regular savers that pay interest annually plus bank accounts paying monthly interest.

    Apart from that I have no personal income.

    2016/2017 I was just under the £1000 savings interest allowance. 2017/2018 - a couple of my accounts have closed abruptly so I might be over the allowance by April

    Where do I stand - do I have to complete a self assessment short tax form just to be on the safe side??
    “Create all the happiness you are able to create; remove all the misery you are able to remove. Every day will allow you, --will invite you to add something to the pleasure of others, --or to diminish something of their pains.”
    • dampsquib
    • By dampsquib 21st Oct 17, 5:24 AM
    • 170 Posts
    • 95 Thanks
    dampsquib
    Apologies if this is the wrong place, but have others received a letter (received 16/10/2017) from HMRC re: "Changes to the way we collect tax from your savings interest" blah blah ..."What Happens next "We'll contract you if you have any tax to pay on your savings..".
    dated at the bottom HMRC 08/2017
    ?
    Originally posted by Mee
    I've also had one of these letters.
    I'm wondering if they have gone to all taxpayers, or if they have only gone to ones that will soon get a coding adjustment re interest?
    • Dazed and confused
    • By Dazed and confused 21st Oct 17, 8:45 AM
    • 1,980 Posts
    • 889 Thanks
    Dazed and confused
    Maybe to those who are due a bill for last year, not just those who need a new code for this year?
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