Self Assessment - Can this be true!

Pythagorous

I do my own yearly self assesment as I have some income apart from my normal employment which doesn't get taxed at source.

Anway I noticed my tax rebate was smaller than I expected (I paid money into a personal pension so was due a rebate even after having to pay tax on the extra income). Looking into it further it seems the bank only applies a 20% tax on my savings income, and as I'm in the 40% bracket the IR have now applied the extra 20%.

I wasn't aware that your bank savings could also be liable to 40% tax! The thing I really don't get, however, is that if I didn't have the extra income to declare I wouldn't need to do a self assesment at all and the tax man would never be any wiser (and neither would I!) about the savings which have only been taxed at 20%. Surely there is a lot of lost tax revenue from bank savings or am I missing something!?

CLAPTON

mad as it seems the UK tax system is based on people being honest responsible and knowledgeable

so if you are a 40% tax payer you need to inform the HMRC about any extra income from savings account of dividends

Pythagorous

Thanks Clapton.

That seems crazy as I'm sure there are a lot of 40% bracket people who aren't even aware of the fact that they haven't paid enough tax on their bank savings.

Maybe I'm just niave. but I'd have thought the IR would have been better at getting hold of this sort of tax revenue. Maybe things will change!

Phil85

The IR do random checks on people to assess whether they are paying enough tax, this is meant to 'scare' people into being honest but i am sure there are many unscrupulous people out there, and as you say, also many people who just don't realise they aren't paying enough tax! However, luckily for the taxman most people are honest!

fengirl_2

I'm sure there are thousands of people who unwittingly break other laws on a daily basis, but the same applies - ignorance is no excuse.
HMRC only has so many resources - they get loads and loads of information whcih needs to be sorted and sent to the various tax offices (as they used to be called) - they can only act on a small part of it. They are notified of bank interest paid and they do check that it has been declared, but with all the other bigger tax dodgers around, it's impossible to check everyone.
When I was an Inspector, we always acknowledged that a lot of tax was really just optional - up to the honest person to declare it. But the penalties are there should you be found out and that's the deterrent.

Nosht

fengirl wrote: »

I'm sure there are thousands of people who unwittingly break other laws on a daily basis, but the same applies - ignorance is no excuse.
HMRC only has so many resources - they get loads and loads of information whcih needs to be sorted and sent to the various tax offices (as they used to be called) - they can only act on a small part of it. They are notified of bank interest paid and they do check that it has been declared, but with all the other bigger tax dodgers around, it's impossible to check everyone.
When I was an Inspector, we always acknowledged that a lot of tax was really just optional - up to the honest person to declare it. But the penalties are there should you be found out and that's the deterrent.

Apart from our "honourable" Members of Parliament, of course. :eek:

Regards,

N.

Anon

fengirl wrote: »

I'm sure there are thousands of people who unwittingly break other laws on a daily basis, but the same applies - ignorance is no excuse.
HMRC only has so many resources - they get loads and loads of information whcih needs to be sorted and sent to the various tax offices (as they used to be called) - they can only act on a small part of it. They are notified of bank interest paid and they do check that it has been declared, but with all the other bigger tax dodgers around, it's impossible to check everyone.
When I was an Inspector, we always acknowledged that a lot of tax was really just optional - up to the honest person to declare it. But the penalties are there should you be found out and that's the deterrent.

I had always assumed that it somehow got fed into the computer system somewhere, as the tax is taken by the bank and given to HMRC (I assume against your name, as I cannot recall being asked for my National Insurance number by the bank?).

Anon

dutchie

Actually it is crazier than that.

HMRC tell a lot of people that they don't want them to do a self assessment, even if they are in the 40% tax bracket and receive bank interest that should be taxed extra. In that instance they don't care about it.

This happened to me a few years ago, and when I phoned up to double check they really didnt want me to declare this, I was told it is because the admin cost of collecting the tax is not worth the effort in cases like mine!