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

jem16

thesaver79 wrote: »

Will they ask me for documentation or will they just trust the amounts I declare?

They will just trust your figures.

royal23

wow, thanks everyone for all the quick and very helpful answers.
this is such a great forum! i've been lurking for a while and it's great to see such quick replies.

ok, so i will try to phone HMRC, or write to them and let them know, and that should be it.

jem16 wrote: »

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

to your point about pension contribution: my income of ca. £55K contains up to £10k of annual bonus (quarterly commission of up to £2.5K which i usually hit, sometimes a little less, so my max annual would be £58)
i already contribute to my pension plan, currently 3% and my employer pays 5% on top; but that's only based on the base salary, i.e. the last £10K which is in commission isn't taken for the contributions.
sure, increasing that by a larger amount would get me below the higher tax threshold, but then i'd also have less to live on... have to think about that but i intend to increase my contribution to around 8% shortly and see how it goes.

royal23

question about the sums and the actual percentages:

i found the letter from my bank (santander) "your annual interest summary for tax year 2011/12"

it shows £130.53 intrest paid, and £32.62 tax deducted to 5 April 2012.
so that's 24.99%... i thought the basic rate is 20%?

40% of the £130.53 would be £52.21.
given £32.62 was already deducted, I owe them £19.59, correct?

but one more thing:
this letter from my bank only lists the saving accounts interest.
i also had interest on my current account with santander (it was the Santander Zero with a 5% interest for 12 months for balances up to £2,500 or something). that's not included in the letter.
do i have to go through my statements to see how much interest i received from that account and add this to the total?
wondering why it's not on the "interest summary" letter... (all my accounts are with santander).

jem16

royal23 wrote: »

it shows £130.53 intrest paid, and £32.62 tax deducted to 5 April 2012.
so that's 24.99%... i thought the basic rate is 20%?

It is - you are working it out on the net figure, not the gross figure on which tax is deducted.

The gross is £163.16 and 20% of that is £32.63. ( Bank has probably rounded up/down figures somewhere)

40% of the £130.53 would be £52.21.
given £32.62 was already deducted, I owe them £19.59, correct?

No you have to use the gross figure. 40% of £163.16 is £65.26.

Make sure you make it clear to HMRC what your gross figures are or tell them the net figures and let them work out the gross.

do i have to go through my statements to see how much interest i received from that account and add this to the total?
wondering why it's not on the "interest summary" letter... (all my accounts are with santander).

Sometimes the current account interest is not listed. Phone up Santander and ask for a tax certificate for your current account and meanwhile you can go through your statements.

royal23

oh of course! makes sense now, thanks for pointing out the gross/net mistake.
thanks a lot for your help.