Demand for tax on untaxed interest

MoneySavingTart

HMRC have just sent a demand for tax they say is due on untaxed interest for 2018/19.
The demand simply states an amount of untaxed interest and the tax due on it.
There are no details of the source of this untaxed interest and so it is impossible for me to check if they are correct.

If any other company sent an invoice for payment they would have to say what was being paid for.

Do I just have to accept HMRC are correct and pay up or an I entitled to a breakdown of where this interest came from.

NB they are quite possibly correct that I have bank/BS interest untaxed but I feel i ought to be able check their working.

Thanks
MST

molerat

Your bank supplies you with details of interest paid, the same as they supply to HMRC. Just check those figures.

BoGoF

They probably feel (rightly) that it is your responsibility to declare any interest that generates a tax liability.

MoneySavingTart

I've added up all the interest that I can think of, deducted £500 for 40% tax payer allowance and the figures are lower than HMRC total.
I dont get asked for a tax return so I've not automatically sent them details of interest.
MST

BoGoF

You don't deduct the £500 from the amount of interest received - a common misconception.

The calculation will show the first £500 taxed at 0%.

00ec25

MoneySavingTart wrote: »

I dont get asked for a tax return so I've not automatically sent them details of interest.
MST

you have not appreciated the way the world works

you are a higher rate taxpayer, it is YOUR RESPONSIBILITY to self assess your own tax position and contact HMRC to notify them of your workings and pay them what you think is due. It is not their responsibility to send you an invoice and workings

HMRC receive independent info from elsewhere, (your bank), telling them how much untaxed income you have received. HMRC, knowing you are a higher rate taxpayer, do their own calculation, match that to yours, and accept what you paid if the 2 figures are close

what HMRC don't like, and take a less forgiving attitude with, is a taxpayer not declaring untaxed income and leaving them to have to chase you for it. In such circumstances they tend to "slightly" overestimate and make you justify to them why their number is too high as you would have done had you self declared.

you do not hold the moral high ground, and it is you who has to grovel to HMRC to get them to accept your (now late) declaration of a lower amount.

https://www.gov.uk/check-if-you-need-tax-return
If you had untaxed income
You must tell HMRC if you had:

more than £2,000 income from share dividends
between £1,000 and £2,500 in any other untaxed income, such as commission or money from renting out a property
You do not need to send a return for this. You can either:

check your Income Tax and go to ‘Tell us about a change’
call HMRC

you already know that as a HR taxpayer the £1000 threshold is in fact reduced to £500, and you certainly had more than that, otherwise you would not have started this thread. So, whilst you may not need to do a full tax return, you certainly need to at least tell them about your untaxed interest in future...

Dazed_and_confused

What calculation have you received?

A P800 or PA302?

MoneySavingTart

It's a P800

Dazed_and_confused

You have a couple of options then.

You can try and find the information HMRC have used on your Personal Tax Account on gov.uk. There is a huge thread about this data on the MSE savings board and finding it seems a bit of a dark art.

Failing that then yes you are perfectly entitled to ask HMRC for a breakdown of the overall interest amount used in the calculation.

deducted £500 for 40% tax payer allowance

There is no allowance for savings interest. Some of the interest will be taxable at the savings nil rate of 0%, likely £500 from what you have posted, but you cannot deduct that from the amount included in your tax calculation.

xylophone

If you type savings and dividend tax into Google you should be able to pick up the pdf 2019 Final Guide from LITR which explains how interest and dividends interact with non savings income in respect of tax.

badmemory

00ec25 wrote: »

what HMRC don't like, and take a less forgiving attitude with, is a taxpayer not declaring untaxed income and leaving them to have to chase you for it. In such circumstances they tend to "slightly" overestimate and make you justify to them why their number is too high as you would have done had you self declared.

This is not strictly true. I used to file self assessment & HMRC told me I must stop as they no longer needed it. The fact that they don't seem to be able to get either my interest or my untaxed income correct seems to be irrelevant. I now seem to be in the position of having to bully someone on the end of the phone to get them to put it right. It makes no difference to the tax payable. But how do I know that they won't come back years down the line & try fining me for letting them get it wrong!


I am now so fed up with the mess they make of this that I may consider doing them out of almost £60 tax this year. For me a 53 week state pension year. They can't even get it right by their own rules in a 52 week year.