Personal Savings Allowance guide

Nonthewiser

Hi. Newbie poster here.

I'm a standard rate tax payer who will earn interest on savings that will take me a little over the 1,000 Pounds, whereby this year I'll have to pay tax on any amount over that figure. I gather tax will be collected by means of tax code adjustment. My two questions are:

1) Will this result in my tax code changing automatically (i.e. does my bank(s) inform the IR of the interest figure I've received?) or will it involve some kind of form filling?

2) The poor returns on savings interest rates (notably Santander 123 halving their rate) means I will not hit that 1,000 pound figure next year. Again, will the IR know this or might I continue to pay a higher rate of tax than I should unless I do some form filling?

Many thanks folks

Dazed_and_confused

If you want to avoid a debt building up any more than it already has done you could log into your personal tax account and let hmrc know the estimated figures for this year and next so they will update both tax codes as accurately as possible.

Not sure if its a form as such or just a message option within the tax account but you can do it one way or the other.

Remember ALL savings interest is actually taxable but normally if still basic rate payer after adding ALL savings interest and wages are more than £16000 then £1000 will be taxed at 0% - this is the personal savings rate band (it's not actually an allowance)

Consumerist

Dazed_and_confused wrote: »

. . . Remember ALL savings interest is actually taxable . . .

... except ISAs and some National Savings (e.g. Index-linked certificates).

Nonthewiser wrote: »

I'm a standard rate tax payer who will earn interest on savings that will take me a little over the 1,000 Pounds, whereby this year I'll have to pay tax on any amount over that figure. I gather tax will be collected by means of tax code adjustment.

Just an aside - but as you say you are close to the £1,000 limit, it might be worth mentioning that if you receive "rewards" on any accounts (as opposed to interest) then they are regarded is "other taxable income" on which tax has already be paid (e.g. Halifax & Co-op Bank rewards). These rewards do not count towards the £1,000 allowance/tax-band.

Nonthewiser

Cheers both. Am I correct in thinking that the bank(s) inform the tax 'boys' how much interest has been earned and tax code will be adjusted automatically?

bigadaj

Nonthewiser wrote: »

Cheers both. Am I correct in thinking that the bank(s) inform the tax 'boys' how much interest has been earned and tax code will be adjusted automatically?

No you need to declare and calculate it your self.

Easy to,include with self assessment or you can ring or write to declare it, and there's now the opportunity to amend it online with your personal tax account.

Dazed_and_confused

Seemingly so yes however that would mean you were in arrears and paying more than one years tax in one year albeit quite some time after the interest was received.

Say you do nothing then the banks tell the HMRC about the (non ISA :cool:) interest next spring once the tax year ends. HMRC would send you a calculation for 2016:17 and amend your 2017:18 tax code to include an estimate of the interest.

When your tax code is issued for 2018:19 it would include an estimate of the interest HMRC expect you to receive plus the tax due for 2016:17

polymaff

Dazed_and_confused wrote: »

... the (non ISA :cool:) interest ...

ITIYM Taxable Savings Income

Nonthewiser

Cheers guys. Please see GOV.UK updated Guidance (28 Sept. '16) and in particular point 7:

https www gov uk/government/publications/personal-savings-allowance-factsheet/personal-savings-allowance

Kind regards

NB Sorry, as a new user apparently I'm not allowed to post links...just fill in the gaps

Amigo34

bigadaj wrote: »

No you need to declare and calculate it your self.

Easy to,include with self assessment or you can ring or write to declare it, and there's now the opportunity to amend it online with your personal tax account.

Not sure this is correct.
As previously said, the HMRC guidance/ note 7 says:


HMRC will normally collect the tax by changing your tax code. Banks and building societies will give HMRC the information they need to do this.

bigadaj

Amigo34 wrote: »

Not sure this is correct.
As previously said, the HMRC guidance/ note 7 says:


HMRC will normally collect the tax by changing your tax code. Banks and building societies will give HMRC the information they need to do this.

I suppose nothing is definite as it is a new change.

However it's ultimately the responsibility of everyone to declare their income and pay the correct amount of tax. This might be covered by the abive statement but if there is a failure of communication within or between the bank or building society and Hmrc then the liability still falls on the individual.

Probably most sensible to check tax coding at teh year end as the tax due under self assessment wouldn't need to be paid until the following January in any case, so there's time to adjust and or pay.