Will i pay tax on my interest?

Lokolo

cottager wrote: »

Ah, thanks Lokolo. Sorry, I missed that bit.

If you need the form and have adobe reader thingy:

http://www.hmrc.gov.uk/forms/r40.pdf

Mikeyorks

Lokolo wrote: »

They can tell if you are lying or not from your NI number

We appear to be in firm disagreement today. But ..... only ISAs are organised by NINO (because there's a collation to do to check compliance with the allowance). And, of course, perversely they're never referred to HMRC for interest / repayment purposes.

Bank account data submitted by deposit takers to HMRC are simply organised by name / address for the most part. HMRC then collate those in a data warehouse using the name / address. NINO would make more sense .... but there are issues for bulk processing because of the absence of check digit protection / tens of thousands of duplicates etc.

Mikeyorks

cottager wrote: »

Nothing to claim yet then, till after 5 April, if we're still in the first year?

If your earned income + gross interest exceeds your Personal Allowance (PA) .... then that's right. You have to suffer deduction of 20% ...... and then claim. (but don't forget if your income is below the PA then any interest from that point up to the PA .... you get at 0%)

But if your income + gross interest is less than your PA .... then you can file R85(s) to get the interest paid gross

cottager

Mikeyorks wrote: »

If your earned income + gross interest exceeds your Personal Allowance (PA) .... then that's right. You have to suffer deduction of 20% ...... and then claim. (but don't forget if your income is below the PA then any interest from that point up to the PA .... you get at 0%)

Thanks for that and the above is me, not your other scenario.
A part-time income a bit less than the PA, plus an as yet unknown amount of interest, which together would not be more than £8355.

But what I was trying to clarify (badly!) in the last post wasn't about claiming retrospectively in April with an R40 for the current tax year; but rather your point about the 10% savers rate only being introduced last April. If this is the first year in which it's being applied, there is nothing I could claim for last year?

Lokolo

Mikeyorks wrote: »

We appear to be in firm disagreement today.

Meh doesn't bother me, as long as we don't start calling each other ****heads all fine I'm too tired today, I had 4 hours sleep last night

I always thought they would check tbh, they can look at up how much tax you've paid etc. so could technically work out how much you've earnt.

Mikeyorks

cottager wrote: »

but rather your point about the 10% savers rate only being introduced last April. If this is the first year in which it's being applied, there is nothing I could claim for last year?

Possibly - if your income was similar. Don't forget that the start band for tax was 10% in 07-08. So if your earned income + interest terminated in the band formed by PA (£5225) + the 10% tax rate (to £2230) i.e £7455 ...... then you can reclaim the excess over what was due at 10% (and - if it similarly applies - for the previous 5 years).

Potentially a bit of work (the old allowances rates are archived on the HMRC site) ..... but worth it as once you've calculated one year it's basically repetition? I've just had to do similar as an Exor and tend to put the calculations in a table on a Word doc (one for each year) and then just attach them to a single R40 / P810 or whatever the cover document is. Makes it easier your end and, I strongly suspect, at their end. Lot easier to interpret than hand written figures.


http://www.hmrc.gov.uk/rates/it.htm

Mikeyorks

Lokolo wrote: »

I always thought they would check tbh, they can look at up how much tax you've paid etc. so could technically work out how much you've earnt.

They do it selectively ..... they don't do it wholesale. And I suspect they 'risk' analyse it and look particularly at accounts where R85s are filed but the interest exceeds £xxx. And interest chargeable accounts with yields over a determined value.

But they can be too cute for their own good. They picked up - but declined to admit it - a very sizeable sum I had in an account for a few months (property sale). And, no warning, just slapped a large HR restriction into my Code number. When I rang them and pointed out it was (and deliberately) a new Web account and the interest would not be paid until after the end of the tax year in question .... they actually got all flustered and embarassed. A very novel experience.

cottager

Thanks Mikeyorks -- very helpful and much appreciated.
And I love the experience with the tax office recounted in your other post -- novel indeed

Mikeyorks

Mikeyorks wrote: »

Possibly - if your income was similar. Don't forget that the start band for tax was 10% in 07-08. So if your earned income + interest terminated in the band formed by PA (£5225) + the 10% tax rate (to £2230) i.e £7455 ...... then you can reclaim the excess over what was due at 10% (and - if it similarly applies - for the previous 5 years).

Sorry (I blame the 'flu) .. just realised part of that is confusing. I'll try again.

For 07-08 and earlier (where the 10% tax band applied) : - any interest is wholly reclaimable (all 20%) where it fits into the band above your earnings and up to your PA for the year. Half of the tax on interest (reducing it to 10%) is reclaimable for the interest that fits into the band (£5225 to £7455 for 07-08) formed by your PA + the upper limit of the 10% band. Obviously any interest that goes above PA + 10% band (ie sticks up into the 22% band) is not reclaimable ..... but it is nevertheless still only chargeable at the 20% (not the 22%) rate.

Perhaps not easier - but that is now more accurate! Sorry .... I'll go away and cough a bit more now!

soulsaver

You use the R40 form to claim back over paid tax on savings for up to 5 years, HMRCs helpline told me t'other day. Itn't just for the 10% issue..