Personal Savings Allowance guide

polymaff

eskbanker wrote: »

....in which case, the answer to the question posed ("how are we supposed to accurately calculate the amount of interest paid in any one tax year") is simply "Look at your tax statements not any other annual statements"!

Quite so, but I believe that the core issue LJ is raising - and only LJ can confirm my interpretation - is the foolish generation of a "yearly summary", "annual personal saving statement","savings account annual statement" etc. etc. that might fool tax-payers into using the data in these documents to complete their tax returns.

It is an existential hazard - particularly when the 12 months arbitrarily chosen is near to the 12 months of a tax year - not the least due to the institutions being very quick to issue these useless documents whereas the data really required follows well after the tax-payer may have filed.

Now, let's let LJ comment, shall we?

marsbar

hi there,
in regards to your link 1 about the personal tax savings allowance. The article states that any extra interest earned above the allowed amount would be deducted through your tax code.
My question is that if you earn any extra interest above the limit do you have to fill in a self assessment tax form or is it automatically done by the inland revenue through the tax code? If it is automatically done by the inland revenue will they notify me through the post with the breakdown of the figures so that I can check it? Thanks
Regards,
Tony.

Consumerist

marsbar wrote: »

hi there,
in regards to your link 1 about the personal tax savings allowance. The article states that any extra interest earned above the allowed amount would be deducted through your tax code.
My question is that if you earn any extra interest above the limit do you have to fill in a self assessment tax form or is it automatically done by the inland revenue through the tax code? If it is automatically done by the inland revenue will they notify me through the post with the breakdown of the figures so that I can check it? Thanks
Regards,
Tony.

HMRC seems to have its own interpretation of the legislation but, as I understand it, HMRC will adjust your tax code and advise you by post, or through your Personal Tax Account if you have one. It is your resposibility, however, to advise them of any savings (or any other) income which they have not included.

polymaff

Consumerist wrote: »

HMRC seems to have its own interpretation of the legislation but, as I understand it, HMRC will adjust your tax code and advise you by post, or through your Personal Tax Account if you have one. It is your resposibility, however, to advise them of any savings (or any other) income which they have not included.

Excellent reply. We seem to be caught in a no-man's land at present. Eventually HMRC (say they) will competently pre-populate your self-assessment form with all of your data. All you'll have to do is to sign it off.

Whatever happens, though, Consumerist's final sentence applies. If there's a mistake the default assumption will be that it is all your fault

lindajill

Hello there - LJ here. Thank you for all your responses to my earlier post. OK, here's the situation: I followed Martin's advice and opened 11 different bank accounts with 7 different providers to maximise switching payouts and high interest bank and regular saver accounts. I also have stocks and shares and other investments. None of the providers deduct tax from interest payments, and annual statements (not tax statements as no tax is deducted from interest now) often relate to the anniversary of the account opening or maturity rather than the tax year. When this is the case, in order to calculate interest earned in any given tax year, you have to be able to calculate interest earned in the same way that a bank or building society does: ie on a daily basis on constantly changing balances, paid monthly or annually, for a tax year that isn't neatly covered by these statements!! So back to my original question: how on earth are you supposed to calculate the total interest earned in any given tax year?

eskbanker

lindajill wrote: »

When this is the case, in order to calculate interest earned in any given tax year, you have to be able to calculate interest earned in the same way that a bank or building society does: ie on a daily basis on constantly changing balances, paid monthly or annually, for a tax year that isn't neatly covered by these statements!! So back to my original question: how on earth are you supposed to calculate the total interest earned in any given tax year?

You don't need to calculate interest earned from first principles, you just need to report interest paid, which is easily visible on statements for any providers not issuing tax certificates - even though interest is now paid gross, the providers that I deal with still issue annual tax certificates just showing the gross interest paid figure rather than the previous versions that had gross/interest/net on them - the likes of the LBG brands (including TSB), RBS and Santander issue these for example. Have you checked in your online banking?

Regular savers will typically only pay interest once a year and stocks and shares won't pay any interest anyway, although you need to track dividends for unwrapped investments.

Perhaps I'm missing something here?

polymaff

lindajill wrote: »

.. often relate to the anniversary of the account opening or maturity rather than the tax year. When this is the case, in order to calculate interest earned in any given tax year, you have to be able to calculate interest earned in the same way that a bank or building society does: ie on a daily basis on constantly changing balances, paid monthly or annually, for a tax year that isn't neatly covered by these statements!! So back to my original question: how on earth are you supposed to calculate the total interest earned in any given tax year?

You ignore those non-FY-related "annual statements" and ask the institutions for annual statements aligned to the FY. Some send them automatically anyway, some provide them online, some will need to be pushed. I've not been refused by any institution yet. "Please supply a statement of interest paid and any tax deducted during financial year 2016/17 for all accounts solely or jointly in my name"

This is really the only way to cover yourself against later accusations of making a false declaration to HMRC.

Another approach is to "shadow" your accounts using a spreadsheet. This is not an easy task as you have to deduce how each institution does its sums. And you need to be spreadsheet-competent. And, it will carry no weight in a dispute with HMRC.

If you do both, then one is a good check against the other - and institutions make more mistakes than might be thought!

Consumerist

polymaff wrote: »

. . . Another approach is to "shadow" your accounts using a spreadsheet. This is not an easy task as you have to deduce how each institution does its sums. And you need to be spreadsheet-competent. And, it will carry no weight in a dispute with HMRC.

If you do both, then one is a good check against the other - and institutions make more mistakes than might be thought!

This is what I do as a belt-and-braces approach.

You are not interested in how the institutions do their sums but, as said earlier, you only need to keep a tally of interest actually paid since 6 April in any tax year. It's this figure which HMRC is interested in.

ColdIron

Every bank I've every dealt with (and I have a few) supply an annual Statement of Interest for the previous financial year. Have you gone paperless? Have a hunt around in your online banking. That's all I ever do, simplicity itself

I can't help thinking you are creating a mountain out of a molehill

Edit: I use AceMoney as a matter of course and usually reconcile it with the statements but there's rarely a discrepancy and always something I've overlooked myself

polymaff

Consumerist wrote: »

... you only need to keep a tally of interest actually paid since 6 April in any tax year. It's this figure which HMRC is interested in.

Agree, but this is not a trivial task, with interest bearing current accounts in particular. Suppose, come 6th April, you go online and attempt to do this. Ideally, you'd ask that a 12-month statement, filtered for interest payments be downloaded. Very few institutions allow you to do this. Some can only filter by all credits to the account. Hardly any allow you to process 12 months of data in one go. All very ragged. All subject to personal error. More error if you try to do this every month.

As in many other aspects of customer service, I find the newer institutions are streets ahead. Vanquis Bank's download options are this financial year, last financial year. Just what the doctor ordered