Tax on interests

DreamerFTB

I created a few current accounts to get taxable interests (first time for me, before I was just on ISA). I am on the higher income tax band (40%), and reading in the gov website here and here it seems I have to tell how much interest I earned.

Is this process a pain? I have never done it and I am looking for opinions. Also I started this month so probably I will have to tell them for this ending tax year too?

grumbler

MSE article:
Self-assessment Q&A: Fill in tax return now or face fines

DreamerFTB

The article states at the beginning "if you are self employed", I am not, does it count?

Also they say you need to fall in one of these caregories:

You're self-employed
You're a company director
Your annual income is £100,000 or more
You have an income from savings, investment or property
You need to claim expenses or relief's
You or your partner receive child benefit and your income is over £50,000
You get income from overseas
You have income from trusts, settlements and estates
You have capital gains tax to pay
You've lived or worked abroad or don't live in the UK permanently
You're a trustee

but I am not in any of them. I am high tax payer but I earn less than 100k, and the tax gov site does not mention this limit, they just say "if you are a high tax payer".

I am a bit confused

SevenOfNine

My husband is a 40% taxpayer & the answer is yes. He declares the interest he's earned during the year already taxed at 20% & HMRC collect more. Which is why most of his/our savings are in my name as a non taxpayer.

He has a reasonable amount in ISA's (to avoid savings interest tax altogether though interest is p! ss poor of course), but still better to have them just to be on the safe side in case I drop dead suddenly.

The magic words are "when you must pay additional tax" https://www.gov.uk/apply-tax-free-interest-on-savings/how-much-tax-you-pay

MorganaLF

Do you generally fill in a self assessment form?

sheramber

Any tax due can be collected by adjusting your code number.

You can phone them and advise them of how much net interest expect to receive for the year to 5 April and they will adjust your code number to collect any tax due through your PAYE deductions.

DreamerFTB

MorganaLF wrote: »

Do you generally fill in a self assessment form?

No, never done it before.

sheramber wrote: »

Any tax due can be collected by adjusting your code number.

You can phone them and advise them of how much net interest expect to receive for the year to 5 April and they will adjust your code number to collect any tax due through your PAYE deductions.

This looks interesting, by "them" you mean HMRC right?

colsten

DreamerFTB wrote: »

This looks interesting, by "them" you mean HMRC right?

Did you read the link that SevenOfNine kindly provided for you? It says on there:

When you must pay additional tax
You must pay extra tax on your savings and investment interest if you pay Income Tax at the higher or additional rate.

Tell HMRC what interest you’ve received so they can tell you how they’ll collect the extra tax.

You’ll pay the extra tax either:

as part of your Self Assessment bill if you send in a Self Assessment tax return each year
through your employer or pension provider - HMRC will tell them how much to deduct

So it's all straight forward. Start by calling the HMRC.

DreamerFTB

Actually, I would prefer to pay at the end of the tax year (well, in January after the tax year) instead of monthly, so I can keep the money to accrue a bit more interests on top. Not a big difference but if I can keep the money longer..

eskbanker

DreamerFTB wrote: »

Also they say you need to fall in one of these caregories:

You're self-employed
You're a company director
Your annual income is £100,000 or more
You have an income from savings, investment or property
You need to claim expenses or relief's
You or your partner receive child benefit and your income is over £50,000
You get income from overseas
You have income from trusts, settlements and estates
You have capital gains tax to pay
You've lived or worked abroad or don't live in the UK permanently
You're a trustee

but I am not in any of them.

You are if you have an income from savings in the form of interest, as this will only be taxed at 20% and so further adjustment is needed to tax at 40%.

DreamerFTB

Thank you all for the answers guys, I know what to do now