still confused £1000 tax free interest on savings

zagfles

polymaff wrote: »

The responsibility for paying income tax owed by the due date has ALWAYS been that of the tax-payer. Gross payment of interest won't alter that at all. You are right, though, in pointing out that there will be a significant increase in the number of people who have to pay more attention to their tax affairs.

Is this really true? Now, every higher rate taxpayer who earns even a few £ interest is legally required to declare that interest and pay additional tax on it. Also those who earn less than £15600 need to be aware that they either need to fill in an R85 to get interest tax free or claim a rebate at the end of the year.

From April, higher rate taxpayers who earns less than £500 interest won't need to pay additional tax, and those earning under £15600 will not need to apply for gross interest or claim a rebate.

Do basic rate taxpayers earning more than £1000 in interest really outnumber the above two groups?

colsten

Nationwide8 wrote: »

But if I was earning more than £ 16000 ( or whatever it is in 2016 -2017 ) and had more than £1000 in interest I'd be worrying about the HMRC chasing me unless I filled in a self assess form....even if the idea is they "automatically" will somehow get overpaid interest back.
I mean where do they plan to automatically get it from ??? Direct from the person ? Via a letter demanding payment ?

there is nothing to worry about a self assessment - it takes 10 minutes to fill in if your only income is from employment/pension and savings. But there is talk about HMRC collecting the money via adjustments to the tax code. Just sit tight until the details will be revealed.

Nationwide8 wrote: »

...and will HMRC know if you earn more than £1000 interest from multiple banks and not just one ?

they could add up the reported number from all the banks? Just a thought. Although I admit I am intrigued as to how HMRC know what interest I earned as most of my interest-earning accounts don't have an absolutely unique identifier (such as my NI number) for me, so I could be confused with a person of the same name and same DOB. We shall find out later.....

Nationwide8 wrote: »

...Will they chase people who earn above what's allowed and say earn £1400 in interest...Chase them for 20% of £400 ie £80 ?

It seems fair to assume that HMRC will not let us keep money that is due to HMRC.

2010

colsten wrote: »

It seems fair to assume that HMRC will not let us keep money that is due to HMRC.

Except from Google.

Skibunny40

What if it's a joint account and one is a BR taxpayer and the other a higher rate?

Is the amount of interest spilt 50/50 for calculation purposes?

FOREVER21

I am also interested to find out whether HMRC will expect an individual to contact them if they exceed the £1000 figure or if they will just send out a notification and adjust the tax code. I realise SA when only pension and interest is involved would take a limited amount of time but for me I would prefer not to have to complete more forms( even online).

Colsten mentions lack of unique reference number by which HMRC will be able to assign interest to the correct account, but they will have name,date of birth and address, this presumes they do not need a unique number and that their data base is more refined for searching. It will be interesting to see how this does pan out. Of course in future applications for new accounts might ask for NINo.

I think the new system is a step in the right direction and should work, and save time.I am a bit annoyed that I rushed to purchase the 65+ NS&I bond as my first interest has been taxed ,had I waited a couple months it would have been tax free , a loss to me of £80, not very MSE I'm afraid.

zagfles

Skibunny40 wrote: »

What if it's a joint account and one is a BR taxpayer and the other a higher rate?

Is the amount of interest spilt 50/50 for calculation purposes?

Yes. Like now, the HRT payer would need to declare their share of the interest and pay additional tax on it. Under the new rules, they wouldn't if their individual total interest is under £500.

Nationwide8

All interesting but I wonder how much this will cost HMRC if they DO chase people who happen to get Gross interest of £1000 and above and who haven't filled in a self assess form for the £ 10-20-30 onwards ...excess ??? The mind boggles...I mean why bring this in - in the first place ? I suppose they can say they are doing something for the "ordinary" man and woman ??

zagfles

Nationwide8 wrote: »

All interesting but I wonder how much this will cost HMRC if they DO chase people who happen to get Gross interest of £1000 and above and who haven't filled in a self assess form for the £ 10-20-30 onwards ...excess ??? The mind boggles...I mean why bring this in - in the first place ? I suppose they can say they are doing something for the "ordinary" man and woman ??

How much do you think it costs now to chase higher rate taxpayers who get £10, 20, 30 in interest? And so have to pay extra tax by law?

Why do people think there are more basic rate taxpayers earning over £1000 in interest than there are higher rate taxpayers earning more than £0 interest?

Supercar

Interesting response from you and many others. Nice to know I am not alone in confusion. NI number logged against all accounts would help HMRC coordinate bank reports but will they then issue a new tax code every time they get additional interest report for somebody already over £1000. Those on monthly interest deals may then be swamped with code notifications.

chris_m

Supercar wrote: »

but will they then issue a new tax code every time they get additional interest report for somebody already over £1000. Those on monthly interest deals may then be swamped with code notifications.

If/when they do, it'll probably just go to the employer/a pension provider in most circumstances.
When my father was alive he had his teachers pension, a small private pension and his state pension - any code changes just went to the teachers pension people and covered all income sources.