Personal Savings Allowance already messing with tax codes

alternate

Just got a new tax code and they have estimated that I will earn £1500 in interest next year - despite having virtually no taxable savings in the previous 5 years (I only have ISAs and the rest is in my partners name because she is a basic rate payer).

Looking forward a long time on hold with HMRC.

Check your codes ppl.

cabdy

Mine came yesterday, with a reduction of tax allowance by £3450 for predicted savings interest. After 20 mins on hold, I got through to tax office to ask where they got this figure from. I estimate my savings currently generate well below £1000 interest. They said they can't tell me how the figure is calculated, info comes in from all the banks where I have accounts !!! Then they asked if I wanted to change it, so I did. Seems like a complete farce to me.

TadleyBaggie

My tax coding for 16/17 had over £6500 in car and medical benefits added, despite telling them last September I had retired and no longer have said benefits!

realaledrinker

Easier to fill out this form. Took about 3 weeks to get a revised code

https://online.hmrc.gov.uk/shortforms/form/P2?dept-name=&sub-dept-name=&location=43&origin=http://www.hmrc.gov.uk

dori2o

cabdy wrote: »

Mine came yesterday, with a reduction of tax allowance by £3450 for predicted savings interest. After 20 mins on hold, I got through to tax office to ask where they got this figure from. I estimate my savings currently generate well below £1000 interest. They said they can't tell me how the figure is calculated, info comes in from all the banks where I have accounts !!! Then they asked if I wanted to change it, so I did. Seems like a complete farce to me.

The information comes from ANY form youmay have filled in at any pointin the past where you have shown Interest.

There is no limit to how far back the system looks when determining whether or not there is a need to include the savings allowance in your code.

IMO the way they are doing this is completely wrong, and many members of staff have relayed this back to senior HMRC staff.

There is no need for the allowance or interest to bhe included in the code unless the taxpayer specifically asks for it. As it's not PAYE income you can request that the interest is removed from the code completely, it does not have to be included in the code even if it is above the £1000/£500 0% band. However, this MAY lead to the need for you to complete a tax return at the years end although this has not yet been confirmed.

Also the criteria for Self Assessment includes the need to file if you receive more than £2500 in untaxed income, so anyone who receives more than £2500 may have to complete a tax return. Again this is unconfirmed despite several requests for guidance.

As for the plan to have the banks send interest information to HMRC (which they do already in fact), exactly how will this work without significant changes to how the banks operate their accounts?

The banks generally don't have your National Insurance number, just your name, address and date of birth.

How many people have a bank account still in their maiden name, how many people have bank accounts with amounts in them held under old addresses which generate amounts on interest every year?

Without the NINO there is no way to link the account details to each individual. Are the banks now going to have to write to everyone to request this information?

The law as it stands is clear, currently if you have any other taxable income it is YOUR responsibility to declare that to HMRC. If you don't you stand to be at risk of facing penalties/interst and of course payment of the tax due.

That is all HMRC had to do. Enforce the rules which make it the taxpayers responsibility to notify this information, either by post, phone, self assessment or the online Personal Tax Account. Simples.

The way the savings allowance and the deductions in the code are confusing for people to understand, even some HMRC staff can't get their head around it as it's far more complicated than it needs to be.

Savingsbot

I have not received any information from HRMC about the change in my PAYE code for 2017/18 to reflect my untaxed savings interest over £1000 for 2016/17.

I have tried to get information by telephone twice. The first time I was told that I should "chase my bank to tell HRMC what they had paid me in interest",. The second time I was told that if I told the agent to whom I was speaking what my interest total was she could change by code straight away. This is not the position stated very clearly on the HRMC website.

According to HMRC, "tax that is due on bank and building society interest will be collected through the PAYE (pay as you earn) system, based on information provided to HMRC by account providers".

xylophone

I have not received any information from HRMC about the change in my PAYE code for 2017/18 to reflect my untaxed savings interest over £1000 for 2016/17.

Personal tax account.

https://www.gov.uk/personal-tax-account

chrismac1

Not just with this, but with numerous other recent changes to the system such as MTD you get the impression it's just made up on the back of a fag packet then shoved through with no thought of how it will work - or NOT - in practice.