Will >£1000 interest mean I have to do a full tax-return?

DawlishDilbert

I'm a standard rate tax-payer who has never had to do a tax-return as all is quite straightforward (PAYE etc). This year (16-17) I will earn about £3000 in interest on savings (excl ISAs). So I will need to pay tax on the £2000 above the allowance.

Does this mean I will need to do the FULL tax-return or is there an easier and less painful way of just declaring this one part of the full return???

ColdIron

You could just phone them up and they will collect the tax due by adjusting your tax code

[Deleted User]

I am planning to do a letter to HMRC as soon as possible after 5 April 2017 declaring the non ISA gross interest received in tax year 2016/17. Hopefully they will recover the tax due by adjusting my 2017/18 PAYE code accordingly.

bigfreddiel

I'm just curious how you earned £3,000 in interest? At say 1% you would need about £300,000 for the entire year!

Unless this is a small part of your wealth you really need to start investing it. Maybe you have plans, but if not you should see an IFA

Good luck and happy days fj

xylophone

https://www.gov.uk/government/publications/personal-savings-allowance-factsheet/personal-savings-allowance

Morphoton

Remember that bonds pay interest as well as cash. I have a modest investment in Building Society PIBS (Permanent Interest Bearing Shares) which currently pay around 6 to 6.5% and get around £800 per year. They are held outside ISA / SIPP from the old carpetbagging days when you would only get a small demutualisation payment if held in a nominee account.

bigfreddiel

Morphoton wrote: »

Remember that bonds pay interest as well as cash. I have a modest investment in Building Society PIBS (Permanent Interest Bearing Shares) which currently pay around 6 to 6.5% and get around £800 per year. They are held outside ISA / SIPP from the old carpetbagging days when you would only get a small demutualisation payment if held in a nominee account.

Point taken £13k at 6.5% does it nicely

Dazed_and_confused

I am planning to do a letter to HMRC as soon as possible after 5 April 2017 declaring the non ISA gross interest received in tax year 2016/17. Hopefully they will recover the tax due by adjusting my 2017/18 PAYE code accordingly.

No, they will alter your tax code to collect the tax due for 2017:18 but as that year will already have started the tax due for 2016:17 will normally be collected either by you sending payment to the HMRC or an adjustment to your 2018:19 tax code.

If you want to start the process earlier and have some of the debt for 2016:17 collected during 2017:18 you need to be telling them now not waiting till the tax year has ended

[Deleted User]

Dazed_and_confused wrote: »

I am planning to do a letter to HMRC as soon as possible after 5 April 2017 declaring the non ISA gross interest received in tax year 2016/17. Hopefully they will recover the tax due by adjusting my 2017/18 PAYE code accordingly.

No, they will alter your tax code to collect the tax due for 2017:18 but as that year will already have started the tax due for 2016:17 will normally be collected either by you sending payment to the HMRC or an adjustment to your 2018:19 tax code.

If you want to start the process earlier and have some of the debt for 2016:17 collected during 2017:18 you need to be telling them now not waiting till the tax year has ended

The problem is that I won't know if I'm over the £1K limit for 16/17 until after 5 April. I'd be happy for the savings tax, if any, due for 16/17 to be collected by PAYE deduction in 18/19.

Amigo34

DawlishDilbert wrote: »

I'm a standard rate tax-payer who has never had to do a tax-return as all is quite straightforward (PAYE etc). This year (16-17) I will earn about £3000 in interest on savings (excl ISAs). So I will need to pay tax on the £2000 above the allowance.

Does this mean I will need to do the FULL tax-return or is there an easier and less painful way of just declaring this one part of the full return???

As per the Times (money Section Sat 31 Dec)
You must file a tax return if you earn £2,500 or more in untaxed income including from savings and investments

brianh

From the link given by Xylophone:

If you’re a basic rate taxpayer and have savings income or interest of more than £1,000 (£500 for higher rate taxpayers), you’ll have to pay some tax on this. But you don’t need to do anything yet.

HMRC will normally collect the tax by changing your tax code. Banks and building societies will give HMRC the information they need to do this.

If you fill in a Self Assessment tax return you should carry on doing this as normal.

This suggests doing nothing (except calculate the interest for yourself) until HMRC contacts probably by revised tax code.