R85 has ended but what next?

where_are_we

From April 6th 2016 filling in an R85 is a thing of the past (thank goodness!) for non tax payers. My wife and I are non tax payers in our 60`s and I am benefiting from her transferring the marriage allowance to me such that for this tax year 2016-2017 my personal savings allowance is £18100 (11000 + 1100 + 5000 + 1000) and hers is £15900 (11000 - 1100 + 5000 + 1000). We won`t pay any tax on our savings as our total taxable income is less than these personal savings allowances. However we will both exceed the £1000 of interest (thanks to this forum!). My question is will we need to tell HMRC that our interest is greater than the £1000 this tax year 2016-2017 and will we have to supply details of this interest.

antrobus

where_are_we wrote: »

... My question is will we need to tell HMRC that our interest is greater than the £1000 this tax year 2016-2017 and will we have to supply details of this interest.

I don't believe so. Banks etc send returns of interest to HMRC. They collate the data, and if you owe them any money they'll adjust your tax code.

where_are_we

So will HMRC be aware that we have exceeded the £1000 limit (in our case by about £500 or £600 each).

fromtheshires

I could be wrong but if you are non tax payers, any money over the £1,000 you get will be then part of your personal allowance that you are entitled to. Someone with more knowledge will correct me if I'm wrong I'm sure.

EssexExile

They will know.
From their website https://www.gov.uk/apply-tax-free-interest-on-savings/how-much-tax-you-pay

If you go over your allowance
If you’re employed or get a pension, HMRC will change your tax code so you pay the tax automatically.

Edit: also from that site "at your usual rate", so if your usual rate is 0%, that's what your savings get taxed at.

pinkdalek

HMRC seem quite keen to tell you when you owe them money, so I wouldn't get hung up on it

Majority will unlikely not have to pay tax, if you have substantial savings in cash accounts e.g. >£50k invest in ISAs and make sure you keep your statements of interest. It will only affect more people should interest rates suddenly increase considerably, which is unlikely to happen.

If you are a higher rate tax payer don't forget your allowance is only £500.

Full info visit HMRC's website.

msallen

pinkdalek wrote: »

...if you have substantial savings in cash accounts e.g. >£50k invest in ISAs

That will probably cost you more than any income tax might.

Biggles

antrobus wrote: »

I don't believe so. Banks etc send returns of interest to HMRC. They collate the data, and if you owe them any money they'll adjust your tax code.

Well, I was under the assumption you had to notify HMRC. But their website does say, 'If you’re employed or get a pension, HMRC will change your tax code so you pay the tax automatically', though I'm not sure how that could work, as the banks don't routinely take your NI number (except for ISAs). Or maybe they have started doing that now?

frank777

That's why HMRC have set up the Beta online Personal Tax Record, if you register and don't check the records on you - then it's ''Tax Evasion'' simple. If you exceed your Personal Savings Allowance and ''The Bank's computer systems fails to update''

A ''large fine'' to help pay the running costs of HMRC is in order :shocked:

Ken Dodd Tax Evasion - During the trial it was revealed that Dodd had very little money in his bank account. He did however have £336,000 in cash stashed in suitcases in his attic. When asked by the judge, "What does a hundred thousand pounds in a suitcase feel like?", Dodd made his now famous reply, "The notes are very light, M'Lord."

Just For the record...Ken Dodd was NOT prosecuted for tax fraud, but in fact was Acquitted!

LXdaddy

where_are_we wrote: »

From April 6th 2016 filling in an R85 is a thing of the past (thank goodness!) for non tax payers. My wife and I are non tax payers in our 60`s and I am benefiting from her transferring the marriage allowance to me such that for this tax year 2016-2017 my personal savings allowance is £18100 (11000 + 1100 + 5000 + 1000) and hers is £15900 (11000 - 1100 + 5000 + 1000). We won`t pay any tax on our savings as our total taxable income is less than these personal savings allowances. However we will both exceed the £1000 of interest (thanks to this forum!). My question is will we need to tell HMRC that our interest is greater than the £1000 this tax year 2016-2017 and will we have to supply details of this interest.

With these figures you won't pay any tax because your total income including the gross interest comes to less than your total allowances.

There is much discussion about HMRC adjusting the tax code if your receive a pension or salary but the adjustment seems to be an estimate based on previous returns that we have made. Undoubtedly these estimates will not reflect the reality of what interest we will actually earn in the next tax year.

The responsibility lies with the individual to inform HMRC of actual figures and pay the tax which is due.

If as in your circumstances there is no tax due then you probably don't need to make any return or update your Personal Tax Record.

But I'm sure there will be more discussion, debate and clarification during the next year.

where_are_we

Thank you for all your responses. No more R85`s is a step forward but with multiple current accounts, informing HMRC of annual interest amounts will be time consuming. We will wait to see what happens after the end of this tax year.