Paying tax on savings...twice (self employed)

standbyme1970

Can someone please explain to me why I have to pay tax on my savings twice. The bank take their percentage and then when I fill my self assessment out I have to state any interest I have been given and then once I have filed my tax return the inland revenue take their percentage from any interest I have recieved.

Seems unfair...I assume everyone has to do this....

zygurat789

You get credit for the tax deducted by the bank.
This information is required because you may have to pay 40% tax on this income and only 20% has been deducted at source

standbyme1970

Oh I had never noticed this in my previous returns, so I'm still really only being charged 20%?

sunshinetours

If you are a basic rate payer and you filled in return correctly - yes!

standbyme1970

Thanks very much.

ManAtHome

If you have been charged extra by HMRC, you've probably put the interest in the 'Untaxed UK Interest etc' box (instead of 'Taxed UK Interest etc'). If this is the case, give them a call.

standbyme1970

Thanks.

Just one more question.

When you pay your tax you also have to pay for the following year. i.e Filling tax returns in Jan 2013 your actually paying for 2011/2012 tax year. When they calculate what amount you owe for that tax year (2011/2012) they also bill you for the following year (2012/2013).

So If you come under the tax allowance but have already paid tax for it last year do you get all that money back?

if so how do they return that money?

grey_gym_sock

when you come to submit a return for 2012/13, if you've overpaid, they will send you a refund automatically (at least providing you give them bank account details).

if you know that's going to happen, you can apply to reduce your payments on account for 2012/13, to avoid overpaying in the first place. but be careful, because if you ask to reduce payments, and end up underpaying significantly, they will charge you interest at quite a high rate.

standbyme1970

Thanks.

When I filed it they stated I was owed a refund but that was for the bank interest.

It also stated:-

It does not include any 2010-11 payments on account you may have made

So would I need to phone them because surely if I paid for the tax in advance a year before and then after I filed the return I was under the tax allowance surely I'm entitled to that money back?

thanks.

grey_gym_sock

not quite sure ... there's at least 1 screen like that, i.e. showing the position excluding any payments on account ... but they do also have the info about payments on account, so they ought to know the total amount they owe you.

the last time i was owed money by HMRC, i was still using paper returns, so i'm not sure what it should look like online.