Banks and the HMRC

fox_warrior

Does anyone know if banks send "Account Summary" information to the HMRC showing such things as gross interest, net interest, income tax deducted etc at the end of each tax year?

NordicNoir

Yes, they do.

alanq

These days bank interest is paid gross so there will be no net interest or tax deducted. Banks do inform HMRC of the interest paid to each customer.

I am not sure if this is still done annually - there are moves towards salary etc. details being sent to HMRC as soon as the event occurs. If it hasn't happened yet I am sure that this will happen eventually to interest payments.

jonesMUFCforever

Used to be that they would only report more than £300 pa.

antrobus

fox_warrior wrote: »

Does anyone know if banks send "Account Summary" information to the HMRC showing such things as gross interest, net interest, income tax deducted etc at the end of each tax year?

Yup. Used to be called a Section 17 return. (It's called something different now.) Named after s17 of the Taxes Management Act 1970 which introduced it.
http://www.legislation.gov.uk/ukpga/1970/9/section/17/enacted

At one time I used to be responsible for the bl00dy things. They go to Llanishen. HMRC presumably find them useful.

alanq wrote: »

These days bank interest is paid gross so there will be no net interest or tax deducted....

Bank interest was paid gross back in the good old days as well.

alanq wrote: »

...I am not sure if this is still done annually...

I believe so. This appears to be the latest position.
https://www.gov.uk/government/publications/type-17-and-18-bank-building-society-interest-and-other-interest-returns-of-interest-and-eusd/bank-and-building-society-bbsi-european-union-savings-directive-eusd-and-other-oi-returns-of-interest#names-of-returns

Thrugelmir

fox_warrior wrote: »

Does anyone know if banks send "Account Summary" information to the HMRC showing such things as gross interest, net interest, income tax deducted etc at the end of each tax year?

Banks provide the data to the HMRC on an annual basis. HMRC uses a system called Connect to trawl databases. To compare income to balances held. Not just in the UK but in overseas accounts as well. Connect can access amongst other things DVLA, Land Registry also can analyse 4 years of credit card history. In order to profile an individual fully. Also has access to commercial and business data.

realaledrinker

Garbage in, garbage out. A few years ago I had a stroppy letter from the HMRC saying I had undeclared interest received gross. Turns out Halifax had reported my ISA interest as being taxable income paid gross ....

mt99

i believe coming soon is that our self assessment returns will be pre-populated with any interest received.

eskbanker

mt99 wrote: »

i believe coming soon is that our self assessment returns will be pre-populated with any interest received.

What makes you believe that?

Although there is an argument that HMRC could make better use of the data they have access to rather than self-assessment starting with a blank sheet of paper, why would they prepopulate savings interest rather than, say, PAYE earnings, P11D benefits, pension contributions, dividends, etc, etc?

gt94sss2

eskbanker wrote: »

Although there is an argument that HMRC could make better use of the data they have access to rather than self-assessment starting with a blank sheet of paper, why would they prepopulate savings interest rather than, say, PAYE earnings, P11D benefits, pension contributions, dividends, etc, etc?

Its going to be part of Making Tax Digital.

No doubt, they will also include PAYE as well as other income reported to them

isasmurf

gt94sss2 wrote: »

Its going to be part of Making Tax Digital.

No doubt, they will also include PAYE as well as other income reported to them

I thought making tax digital was about abolishing self assessment, not pre-populating it.