Interest from savings in higher rate tax band - how do they know?

MrsMillar

I think I can answer your question as I am in the exact same position. There is a Tax Review Form (I think it's called R89, but I could be wrong) that you can fill in every year. It is pretty simple and you basically fill in the amoung of interest you earn (you do not have to declare interest in ISAs). I got mine by calling my local tax office and they sent me the form.

Also, I was in the position that I pay my pension contributions out of taxed income, so I am also eligible to reclaim the higher rate tax relief. I include this info in the tax review form and also details of gift aid payments I have made. This actually more than off-sets the additional tax I owe on interest payments, so my tax office actually send me a cheque every year due to the tax I have overpaid!!!!

They then adjusted my tax code to try to even things out for the next year, but I told them I wanted to fill in the form every year (you don't actually HAVE to) to be on the safe side.

I would recommend you call your local tax office. Explain your situation - they will know which form you need.