Tax Free Savings Guide

Connie

 For instance, a post on HMRC Customer Forums, 7 months ago by Steve72:

"A few days ago the nationwide confirmed to my wife and I that they no longer forward savings interest to hmrc. Today we made a phone call to nationwide customer service and they also confirmed that they no longer forward savings interest to hmrc. They are adamant that it is the responsibility of the customer."

https://!!!!!!.com/2emfs4ny

(MSE has substituted exclamation marks for the name of the site which converts long URLs to tiny ones)

On the same page, a post by NSilva:

" I'm going to be over (in +-£150) my Personal Savings Allowance for the current tax year (23/24), I contacted my bank (Chase) and they said it needs to be me reporting to HMRC the interest I've earned with them. I'm an employee and I don't complete a self assessment."

On the next page of same link, a post by Bongo:

"I'm probably going to earn more than my tax-free allowance of £1,000 in interest for the 24/25 tax year and I've spoken to my savings bank (Tandem) who say they don't automatically inform HMRC of my interest earnings. They do, however, issue their customers Certificates of Interest at the end of each tax year and say it's for the individual to pass these on to HMRC."

On the same page as Bongo's post  - this one by Richard Sayer:

"I am helping my Mother decide where to invest some money. We have done as much as we can on the ISA's and we are looking at nromal savings accounts. However I have noticed this on summery information for Santander Limited Access Account. 

'Tax status We pay interest without taking off income tax. This is known as ‘gross’ and the interest rate we give you reflects this. If the total interest you receive in a tax year is more than any Personal Savings Allowance that applies to you, you may have to pay tax on it. You’ll need to do this directly with HMRC.'

 This suggests that the bank does not contact HMRC and leaves it for us to do this. I also spoke to someone at Santander who seemed to confirm that this is the case."

Another post on that page, by Aziz el Hage:

"I live in Scotland and I am employed. I have personal savings accounts (with a bank in Scotland) that were opened in September 2023 and that will pay over the £1000 interest limit (note that from Sep 2023 until April 2024, interests are over £1000). Should I inform HMRC myself in regards with paying the tax on interests, or, would my bank notify HMRC on my behalf? Note that I contacted my bank and their agents told me that I should that myself."

In particular, on the next page, a reply from HMRC Admin 19 to Foreveryonea;

"You wll need to notify HMRC of the interest as not all banks do this now, for any liability to be calculated."

All other replies from HMRC to similar posts do reiterate that banks and building societies will submit the untaxed interest details to HMRC.

Dazed_and_C0nfused

Front line staff in banks are clueless about this sort of stuff.

masonic

Agree with Dazed, this is just people being misinformed. HMRC would of course prefer people to contact them if they believe they have untaxed interest that HMRC may not know about. Several on this forum go through an annual process of checking their records against what HMRC holds. This is not necessary for the vast majority of savers using standard savings accounts.

Connie

OK, thanks.

The unearned income figure stated on my Tax Code notices has remained unchanged for several years, in spite of the fact that the actual amount varies from year to year , due to level of savings, interest rate changes, etc.

Unearned income in my case is all interest on savings.

I was worried that I should be informing them of the correct amount each year.

masonic

I don't think you should expect to see anything unless your interest should have resulted in tax being payable. That figure reflects the amount of savings interest HMRC thinks you should be paying tax on and has adjusted your tax code to collect.

Connie

I do pay a little tax on pensions plus unearned income.

The correct unearned income figures would push it slightly higher.

Hopefully they won't leave it to accumulate too long before asking me for back tax.

BurtonBloke

I have a 1 year cash ISA that matures in June 2025

My question and I apologies if it sounds naive, can I top my current 1 year cash ISA with part or all my new £20,000 tax year allowance and still have tax free savings in my 1 year cash ISA?

Or what is the best approach for an ISA that mature part way into a new tax year, wait until it matures or open a new ISA at the start of the new tax year?

Thanks BB

Mee

I've read How the starting rate for savings works - Money Saving Expert page, but I'm still confused as to the £5,000 starting rate for savings affects me.
 I earn on average (on a zero hours contract) around 6K at most, but HMRC have reduced my tax code due to supposedly earning around 3K interest (which I need to check) to 923 L tax code.  So far this tax year I've worked and earned more than most years and I'm likely to breach the new personal allowance of 9K, but I don't understand how this works with £5,000 starting rate for savings as it seems HMRC seem to think I need to pay tax on less than £5K.

eskbanker

Mee said:

I've read How the starting rate for savings works - Money Saving Expert page, but I'm still confused as to the £5,000 starting rate for savings affects me.
 I earn on average (on a zero hours contract) around 6K at most, but HMRC have reduced my tax code due to supposedly earning around 3K interest (which I need to check) to 923 L tax code.  So far this tax year I've worked and earned more than most years and I'm likely to breach the new personal allowance of 9K, but I don't understand how this works with £5,000 starting rate for savings as it seems HMRC seem to think I need to pay tax on less than £5K.

It'll all come out in the wash but if you're concerned about temporarily paying unnecessary tax then update HMRC about your anticipated non-savings income, which can be done online via your personal tax account.

Mee

eskbanker said:

Mee said:

I've read How the starting rate for savings works - Money Saving Expert page, but I'm still confused as to the £5,000 starting rate for savings affects me.
 I earn on average (on a zero hours contract) around 6K at most, but HMRC have reduced my tax code due to supposedly earning around 3K interest (which I need to check) to 923 L tax code.  So far this tax year I've worked and earned more than most years and I'm likely to breach the new personal allowance of 9K, but I don't understand how this works with £5,000 starting rate for savings as it seems HMRC seem to think I need to pay tax on less than £5K.

It'll all come out in the wash but if you're concerned about temporarily paying unnecessary tax then update HMRC about your anticipated non-savings income, which can be done online via your personal tax account.

Thanks. I can't see online how I can do this as a PAYE or what BBSI data they are working on, but hope they will send a list when I get through by 'phone.