Taxed UK interest - Self Assessment Tax Return

chiro

Hi,

I'm so desperate to find the answer.

I've been filling in a tax return and the calculations at the end show that I owe a bit of tax. (I've made a loss on my self-employment so I assume I don't need to pay tax on this. And I pay tax through my PAYE.)

I have no idea why I have to pay tax around £41. So, I've been tweaking numbers to find out where this tax is coming from. It happens to be coming from "Taxed UK interest" from my savings. If I get rid of the number in the 'Taxed UK Interest' box, the calculated amount at the end becomes almost £0.

How is that possible? Why am I taxed on interests that have already been taxed by my banks? Could anyone help me explain this, please?

Many thanks.

TheCyclingProgrammer

Are you a higher rate tax payer? Banks only deduct basic rate tax at source.

chiro

Yes I am. Is that the reason?

What happens to those people who don't do self-assessment then (people who only pay tax through PAYE)? How do they pay tax on savings?

booksurr

chiro wrote: »

Yes I am. Is that the reason?

What happens to those people who don't do self-assessment then (people who only pay tax through PAYE)? How do they pay tax on savings?

the clue is in the name SELF ASSESSMENT - the onus is on higher rate taxpayers to take the initiative and declare their interest voluntarily so the extra tax can be taken

failure to voluntarily do so will count against you if you are investigated - so do you feel lucky??????

Darksparkle

chiro wrote: »

Yes I am. Is that the reason?

What happens to those people who don't do self-assessment then (people who only pay tax through PAYE)? How do they pay tax on savings?

If a higher rate taxpayer has interest of less has £2500 interest and no other reason to be on SA then they would contact the tax office to report the interest.

https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

chiro

Thank you everyone for you reply. This is all clear to me now though I'm sad more tax I'll have to pay! Wish I was Google!

I believe there are so many people who are a high rate tax payer but never register self assessment and never know they have to do it. If the interest has been used before HMRC finds out, they will never be taxed. I'm not sure if I consider myself lucky having to pay it now!

Darksparkle

patanne wrote: »

Next tax year it will be different because the banks will not be taxing at source. A higher rate tax payer will be allowed £500 interest tax free. A 20% tax payer £1000 tax free. One thing I read said that HMRC will be notified how much interest each account has paid. I suspect that the end of the 2016/17 tax year may turn out to be 'interesting' for many!

ETA I think that and the missing back tax on savings is going to be that years cash cow for HMRC, most of the pensions taken in full have been done so they needed something to fill the gap.

They do already get info from banks on interest received.

[Deleted User]

OP -What have you done with the loss on your return? How have you claimed relief for it?

chiro

[Deleted User] wrote:

OP -What have you done with the loss on your return? How have you claimed relief for it?

I actually have no idea how to claim relief on losses. I literally just declare a loss and everything else I don't know what it means I just leave it empty!

Could you tell me briefly how, please?

chiro

This is such a lovely community. I can't be thankful enough for all the advice!

[Deleted User]

chiro wrote: »

I actually have no idea how to claim relief on losses. I literally just declare a loss and everything else I don't know what it means I just leave it empty!

I asked because you stated that you were a higher rate taxpayer which, logically, suggests that you could recover 40% of your losses in tax relief in this return. Seriously - your thread was about £41 in additional tax - if you made a loss of more than 102 this would be wiped out! If you want any further assistance:

1) What was your total loss in 2014/15 on your self-employment?
2) how much was your total income over the higher rate threshold?