higher tax - paying tax on (non ISA) interest?

royal23

hi
i'm a higher tax payer (my total income is about £55,000 per year).
i started to hit the higher tax level sometime during last year's tax year.

during last year's tax year i received (non-ISA) interest in my bank accounts.

only recently have i read about the fact that i will have to take care of paying higher tax on this interest myself. i had no idea about this before.

how does this work? i'll have to look up the exact amount, but it's less than £200 or so. 20% tax was obviously deducted at source.

so do i now need to pay HMRC additonal tax back?

do i fill out a form and make a transfer to them? or can they take it from this tax year's earnings instead?

and what would happen if i didn't do anything? surely the amount is trivial... yet i don't want to do anything wrong.

MoneySaverLog

HMRC will be aware that you're a higher rate tax payer.

The bank would have paid the 20% tax and told them of interest earnings paid. They will be aware of this.

I believe you have to complete a tax return and declare the interest, or write to them. I also believe they will take what's owed through your tax code.

jem16

royal23 wrote: »

so do i now need to pay HMRC additonal tax back?

Yes - provided your pension contributions are not large enough to take you back down below higher rate tax.

do i fill out a form and make a transfer to them? or can they take it from this tax year's earnings instead?

If you already complete a tax return then declare the interest on there. If you don't there is no need to start doing one just for this. Simply phone up HMRC and tell them that you have savings interest to declare as you are a higher rate taxpayer. They will adjust your tax code for this year to collect it. At the end of each tax year you can tell them how much interest you have had over the tax year.

and what would happen if i didn't do anything? surely the amount is trivial... yet i don't want to do anything wrong.

They would eventually find out when the bank makes its returns and come after you for the unpaid tax. Easier just to pay it.

Thrugelmir

jem16 wrote: »

They would eventually find out when the bank makes its returns and come after you for the unpaid tax. Easier just to pay it.

Onus is on every tax payer to complete a self assessment return.

The penalties for not filing same are now severe if imposed. Irrespective of the amount of tax due.

jem16

Thrugelmir wrote: »

Onus is on every tax payer to complete a self assessment return.

I'm assuming you don't mean that you actually have to complete a tax return? Phoning will do the job.

anselld

There is no onus to complete a tax return unless HMRC request it. The onus is to inform HMRC of any additional income ( preferaby in writing). They will collect small amounts via PAYE. They may or may not require a self assessment return ( probably not if most income iscovered by PAYE and there are no other complexities).

John_the_Boy

I am in the same boat and don't complete a tax return. I just send HMRC a letter at the end of the tax year advising how much interest I have received and how much tax has been paid and they send me a bill and collect via current year PAYE.

thesaver79

Oh ok, the thread is of interest to me too. I thought I had to do a tax return because I have some savings, but I then looked here, based on which it seems that I don't need to.

Where am I wrong?

The issue is that I have now closed some of the savings account that generated interest in the previous financial year and I don't have a way to get that information. I know, my bad.

Any advice? I have to do a self assessment or simply write a letter or phone HMRC, when is the deadline?

MoneySaverLog

thesaver79 wrote: »

Any advice? I have to do a self assessment or simply write a letter or phone HMRC, when is the deadline?

If it's the same date as a SA then it's the 31st January for the previous tax year.

jem16

thesaver79 wrote: »

Oh ok, the thread is of interest to me too. I thought I had to do a tax return because I have some savings, but I then looked here, based on which it seems that I don't need to.

Where am I wrong?

There is no need to complete a tax return if you don't fall into the categories linked to above. However you must inform HMRC either by phone or in writing that you have more tax to pay.

The issue is that I have now closed some of the savings account that generated interest in the previous financial year and I don't have a way to get that information. I know, my bad.

You should still be able to get a tax certificate from them if you still have your account details.

thesaver79

jem16 wrote: »

There is no need to complete a tax return if you don't fall into the categories linked to above. However you must inform HMRC either by phone or in writing that you have more tax to pay.

Will they ask me for documentation or will they just trust the amounts I declare? If I don't manage to retrieve the exact details of the accounts I closed, I can still infer the figures approximatively, even if by excess. We're only talking of around £500 of net interest.