Newbie to Self Assessment

talexuser

After a few phone calls to HMRC to sort out out of date savings interest, which has significantly changed since closing various accounts, which kept re-appearing online every few weeks, I have a letter saying they have setup a self assessment record for me.

The letter mentions filing online. Does this actually work ok, as opposed to the normal gateway account which does not allow you to edit incorrect savings interest?

There was no mention of this step in the phone calls. If all I have to declare is my SIPP, dividends and savings interest since final salary pension and state pension is automatic, is this a good move?

londoninvestor

talexuser wrote: »

The letter mentions filing online. Does this actually work ok, as opposed to the normal gateway account which does not allow you to edit incorrect savings interest?

It works fine in my experience. I just type in the total interest number I've calculated on my spreadsheet, and the system doesn't try to interfere.

In the past I haven't bothered to attach the details of my calculations (except for CGT) but I'll probably do so for my savings interest next time I file, given that HMRC will probably try to compare my number against whatever they've got from the banks.

talexuser

Thanks, so it looks like I'm better off with rather than without. I assume tax will still be deducted from my pension under PAYE rather than having to pay the whole amount myself?

Dazed_and_confused

I fear you have misunderstood the purpose of a Self Assessment return.

Your PAYE tax code (used against the income from your SIPP?) is simply a provisional attempt to collect the correct amount of tax during the year.

This is then reviewed after the end of the tax year when final/actual figures are known and any balancing up is done i.e. you have extra to pay or HMRC need to refund some tax already deducted.

If a Self Assessment return is required you have to declare all your taxable income (and any tax deducted at source) and your liability for the year is based upon that.

If all I have to declare is my SIPP, dividends and savings interest since final salary pension and state pension is automatic, is this a good move?

No. You cannot ignore taxable income just because some tax was deducted during the year. You have to declare it all on the return

talexuser

I see, thanks, so I just put down my total gross income figures from all sources, they work out tax, and compare to the amount taken through the PAYE.

Dazed_and_confused

Pretty much yes, total taxable income, and any tax deducted at source.

Even if your pension income has used up all of your Personal Allowance some of the interest and dividends will no doubt fall to be taxed at one or more of the various 0% tax rates but presumably HMRC think you must either owe something extra or have very large interest or dividend amounts in 2018:19.

talexuser

Yes, after Googling around it's because the dividend income is now over their trigger figure for self assessment (I've rearranged savings interest to below the 0% rate figure, to pay mostly 7.5% tax on the dividend interest).

Just that I've read a lot of stuff complaining about SA so a little wary of the unknown.

londoninvestor

talexuser wrote: »

Yes, after Googling around it's because the dividend income is now over their trigger figure for self assessment (I've rearranged savings interest to below the 0% rate figure, to pay mostly 7.5% tax on the dividend interest).

Just that I've read a lot of stuff complaining about SA so a little wary of the unknown.

I'd say relax - I've had basically no problems in 10ish years of doing SA.

Putting all the data into one place, in a tool specifically designed for the job, seems easier than doing various letters / phone calls / Gateway logins to give HMRC all the bits of information individually!

dales1

Yes - what the man said.
Forget about fiddling with HMRC's incorrect figures on your personal tax account - a total waste of time.
Just fill in a self-assessment, and remember to check the box for 'don't collect through my tax code, any tax due on savings'.

Tom99

It's a lot easier to fill in the SA form once a year and pay any tax due by the following 31st Jan than to try and keep up with the way taxable interest is dealt with if you don't file a SA.

talexuser

dales1 wrote: »

Just fill in a self-assessment, and remember to check the box for 'don't collect through my tax code, any tax due on savings'.

Thanks to all for the replies. Please could you expand on the advantage of this step?

Edit, just read the other thread which deals with this point.