Tax On Interest Savings

Joey122

I recently paid too much tax on my Interest savings -

I had to write to the revenue for money back.

I was just wndering if I had paid too little - Would they have written to me ?

How to they keep track / do they keep track on this and has anybody actually been served with a demand for payment of tax on Interest savings?

Seems to me that they dont really track who has paid too little / too much.

Thoughts?

Steve_xx

I get the impression that they would not write to you if you had overpaid tax on your savings. Nor would they necessarily write if you had underpaid tax on your interest earnings.

I think they would contact you if they were looking at your individual record for some reason and they noticed some disparity.

I think that the UK tax regime is now so complex that the Inland Revenue have difficulty in administering it to some degree and therefore there may be a tendency to rely on the individual. This may in part be due to there being a shortage of staff.

However, should they spot an error, and one which looks like a planned deception/evasion. Then they will normally bear down heavily on the individual to the extent that they can and do make a persons life unbearable.

Mikeyorks

Joey122 wrote:

Seems to me that they dont really track who has paid too little / too much.

Thoughts?

If you've paid too much - your responsibility (particularly if you're PAYE and don't submit an SA return) to claim it back normally. See the Taxback section of the HMRC website. They'll normally code out the difference, however, if the circumstances result in your overpaying regularly because, for example, you only owe at 10%.

But if you're underpaid - don't take it the converse is true .... and that they are unaware if you don't advise them. Your interest provider (Bank / BS etc) will already tell HMRC of any accounts to which interest is credited - and that includes accounts for which individuals have registered they are entitled (R85) to gross interest. But that doesn't exempt you from your responsibility to advise on inadequately taxed interest.

Stonk

As has been said, all your banks declare to HMRC the amount of interest they pay you, and the amount of tax deducted. The more interest your banks declare in total, the more likely HMRC is to look closer at you. They aren't gonna bother pursuing you for underpaid tax on £100 of interest, but if you're underpaying tax on £K's of interest then you'd better declare it or face their wrath ...

ksrao

I dont believe that.I am a pensioner and in 2003 I received a demand to pay 40 pence to IR.I paid it by cheque and the bank staff laughed at it as it will cost more to collect 40P.!!

Mikeyorks

ksrao wrote:

I dont believe that.I am a pensioner and in 2003 I received a demand to pay 40 pence to IR.I paid it by cheque and the bank staff laughed at it as it will cost more to collect 40P.!!

Think you missed the bit that said it was advisory and they weren't asking you to pay it? But would carry it forward into the next tax year.