Declaring Interest for Tax-What is the Mechanism?

andy_poulton

I thought this may be a simple query. Loads of info BUT not how to declare/pay.

We are retired basic rate taxpayers with state pension and occupational pensions from our jobs.

We have a cash nesteggs for our futures spread over Coventry/Virgin/Santander.

It is likely we will both go over the Interest Allowance of £1000 for 16/17

How do we declare it/pay tax on interest.

[FYI The three banks will not tell them or me. Just send statements at the years end (I hope) I have just spoken to the HRMC They said just ring and tell them when I know figures and they will take payment.
Then confusingly said estimate the 17/18 and cannot start to take the overdue tax until 17/18. Then said we could pay what we owe for 16/17 now in instalments plus what we think we will owe for 17/18]

WOW anyone any ideas? OR done this yet.
I have the worry beads out havent I
Cheers Andrew

Jeems

For the current financial year, if your total personal income (including savings interest) is less than £16,000 then there is no tax to pay

https://www.gov.uk/apply-tax-free-interest-on-savings

verybigchris

HMRC's current advice is to do nothing:

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.

Just make sure you keep accurate records, so if/when they write to you about unpaid tax you can make sure their calculations are correct.

andy_poulton

Thanks Jeems and Very Big Chris.

I have researched the link and undestand that.

The HMRC made no mention of your Quote when I said it before Chris.

Have you a link or direct me to that as the Institutions/Societies/Banks said they were NOT sending them any info.
Cheers Andrew

greenglide

You could always complete a self assessment? The online version is really simple and you may be omitting things that you can claim.

You will know whether it is right or not rather than waiting to see if HMRC can successfully match the account details.

xylophone

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

andy_poulton

FYI

Coventry stated the staff/members/customers have been all asking each other the same query. Head office has advised staff to answer the query that Coventry will not be informing HMRC the interest paid.

Virgin said simply they will be informing HMRC of amounts paid.

Santander too simply said we have no need to inform them they have full transparency and can see the amount of interest we paid you. They will be in touch if tax is payable.

I will now simply wait until I know excatly what interest I have been paid from 16/17 before my next move.

I know that in my circle of friends and family no one else knows!!
However as expected on this Forum many of you do and are more enlightened.

Thanks Andrew

Pincher

I have been waiting for the poo to hit the windmill the whole year.

This paying interest gross business shifts the tax declaration burden squarely onto the interest receiver. And who in this country are likely to have interest income exceeding £1,000 ?
No, not MSEs, the OAPs.

You are in a good position to go online and sort it out, but how about some of the over 80s, like my mother, who have no clue how to deal with it.

Being forced to file a whole tax return online is going to start a lot of moaning and groaning. I expect all the consumer programs will be doing features by August, and the HMRC will come up with a special form for people to fill in. And then they will be blamed for not enclosing a FREE POST envelope, because the stamp is an expense the OAPs can't cope with.

They will then say they had assumed most people received less than £1,000 interest, but as it turns out, most people are using 3~5% interest accounts, so the HMRC get flooded after all.

Once you register for filing the full tax return, you could find yourself being reminded (pestered) to fill one in forever after. So, I would wait a bit before doing anything.

colsten

This is a 21 month old article you might find interesting in the context.
http://www.telegraph.co.uk/finance/personalfinance/tax/11697816/What-does-the-taxman-know-about-you-your-finances-and-your-lifestyle.html

This, and the European Savings Directive, suggest HMRC know all about the savings interest anybody gets.

Like the OP, I will also have more than the tax-free interest alongside other retirement income. I could just call HMRC about it, or wait until they contact me but I prefer to make a self-assessment like I do each year. I takes next to no time to complete, and that way I will have a written record. I'd rather pay my £300-odd tax now than have the HMRC mess about with my tax code, or send me letters with a potentially incorrectly worked out tax demand.

andy_poulton

Thanks Colsten for the interesting update.

Looks like I will get a demand sometime then.
Cheers Andrew

colsten

I just logged into my personal tax account and see the following



This somewhat contradicts what their web page says! The £3,000 is the sum I gave them in April last year as my expected interest. This is now about £1,100 lower than the interest I already got paid.

The link goes to another page of my personal tax account which shows how my taxable income. So if they do get interest reported by the banks/BSs, they don't appear to be updating the personal tax accounts.