Interest from savings

Sandrann

Does anyone know why HMRC has changed my tax code so I effectively get less money each month based on interest I earned 2 years ago and have already paid tax on? I filled in a long form to query this and eventually had a reply telling me that the way interest is paid on investments had changed!! I know that. I just want to know why I am being penalised now when I have already paid the tax. Thank you.

CLAPTON

Sandrann wrote: »

Does anyone know why HMRC has changed my tax code so I effectively get less money each month based on interest I earned 2 years ago and have already paid tax on? I filled in a long form to query this and eventually had a reply telling me that the way interest is paid on investments had changed!! I know that. I just want to know why I am being penalised now when I have already paid the tax. Thank you.

actual facts would be useful
however they may be assuming that you will earn the same level of interest this year as previously and so adjusted your tax code to collect the tax

polymaff

Sandrann wrote: »

Does anyone know why HMRC has changed my tax code so I effectively get less money each month based on interest I earned 2 years ago and have already paid tax on?

HMRC are attempting to get everyone with taxable savings income to make payments on account. You are just one of many screaming "Not Fair!"

A way around this appears to be to opt for self-assessment and to opt out of this new extension of payments on account. On the SA100, the relevant question seems to be:

If you are likely to owe tax for the current tax year (ended 5 April 2017) on income other than employed earnings/pensions e.g. savings or the High Income Child Benefit Charge, do you want us to use your 2016-17 PAYE tax code to collect that tax during the year?

It might be worth quoting this to HMRC when you attempt to reverse the situation for 2016/17. So far, my Tax Coding doesn't include any attempt to recover any tax based upon extrapolation of previous taxable savings income

xylophone

You are not being penalised for tax you have already paid - HMRC have looked at your tax status ( non taxpayer/basic rate tax payer/higher rate taxpayer etc), estimated the amount of interest you are likely to earn this tax year based on what you earned two years ago, applied the appropriate Personal Savings Allowance and lowered your code to collect what they estimate you will owe.

If you think that there is a vast over estimate then you should let them know.

polymaff

xylophone wrote: »

You are not being penalised for tax you have already paid - HMRC have looked at your tax status ( non taxpayer/basic rate tax payer/higher rate taxpayer etc), estimated the amount of interest you are likely to earn this tax year based on what you earned two years ago, applied the appropriate Personal Savings Allowance and lowered your code to collect what they estimate you will owe.

Sandrann is rather confusing us about relevant tax years*. That said I, and I bet others, are looking to settle the tax we owe on Taxable Savings Income received in 2016/17 in January 1918 at the earliest. I would regard having to pay it - and maybe more - during 2016/17 as a definite penalty.

*Sandrann - estimates based upon past circumstances as the general rule for recipients of taxable saving income begins in 2016/17. "already paid the tax" applied up to and including 2015/16.