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Savings income tax question
5 replies
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dobalex
Forumite 4 posts
Hello everyone.
I have a question about declaration of savings income above 500 for higher rate tax payer (2018/2019 tax year). It is too late to ask, but I need to know what to do.
I was higher rate taxpayer in 2018/2019. I have never done Self Assessment Tax Return as my company uses PAYE and all is done without my participation and concern.
However, I got some income for previous tax year, thus wanted to ask if I had to fill in Self Assessment Tax Return form and report that income?
I got 420.09 interest from Atom bank + 81.67 interest from HSBC advanced current account = 501.76.
This is more than 500 that is untaxable threshold for higher rate tax payer. Should I have filled Self Assesment Tax return form just because of these 1.76 above 500? I tried not to exceed 500 threshold , but got a bit more then expected.
I have a question about declaration of savings income above 500 for higher rate tax payer (2018/2019 tax year). It is too late to ask, but I need to know what to do.
I was higher rate taxpayer in 2018/2019. I have never done Self Assessment Tax Return as my company uses PAYE and all is done without my participation and concern.
However, I got some income for previous tax year, thus wanted to ask if I had to fill in Self Assessment Tax Return form and report that income?
I got 420.09 interest from Atom bank + 81.67 interest from HSBC advanced current account = 501.76.
This is more than 500 that is untaxable threshold for higher rate tax payer. Should I have filled Self Assesment Tax return form just because of these 1.76 above 500? I tried not to exceed 500 threshold , but got a bit more then expected.
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Replies
Probably, yes, you can check at https://www.gov.uk/check-if-you-need-tax-return
I seem to recall that there is an option to simply write to HMRC and advise them of such untaxed income (they'll be informed of the figures by the banks too), especially at such a low level, but if in doubt, contact HMRC: https://www.gov.uk/government/organisations/hm-revenue-customs/contact/self-assessment
Not sure exactly what you did but in general it's better to earn income and pay tax on it than not to earn the income in the first place!
Based on your post it would be taxed,
£500 x 0% = £0.00
£1.76 x 40% = £0.70
Total tax due £0.70
In itself having £501 untaxed interest isn't a reason to need to file a Self Assessment return. But if you did have to file one for some other reason then you would declare the £501 interest.
HMRC get interest details from all the banks and building societies now so you shouldn't need to do anything. HMRC will contact you if you owe anything (more substantial than 70 pence).
1. Interest from banks should be automatically dealt with by amending the tax code (unless a huge amount)
But, seeing how the tax due is about 40p, I don't think that the tax code is going to be materially affected
2. Shouldn't need a self-assessment form (though do go through the check)
3. After October, you can't just write and inform HMRC of untaxed amounts, you have to calculate the tax due yourself.
That is great! Have never done this and thought it was already late.
Went through and the result was that I do not need to fill Self Assessment.
I contacted HMRC via chat. They checked that my records didn't have any details from banks about savings interest gained. I provided them details about the two bank accounts, I got interest from, plus amount of interest and my records were updated. They told me that I don't need to file a self assessment tax return to declare my untaxed interest in this case. Not sure why they told that I would need to do it if I got interest over 10000 only. Regarding my question if I need to calculate and pay tax on 1.76 they answered that I would be liable for some tax but it's under the amount they usually request payment for so I wouldn't get a calculation in this instance and don't have to do anything about it.
I prefer filling my ISA with the rest of my money first, thus would better not to exceed the 500 threshold.
Strange that the interest from two banks where I got savings was not sent to HMRC as they told me that they did not hold record of untaxed interest for 2018/2019 years.
I have also another question. I got sign-in bonus from RateSetter in May 2019 for FISA account opened in April 2018. Should it be reported? If yes for what year - 2018/2019 or 2019/2010?
Well, that's a calculation you can do. If it's a cash ISA, a lot of the interest rates are depressingly low, so you can calculate whether it's better to put it in the ISA at a lower rate, or leave it in non-ISA at potentially a higher rate but with the risk of paying some tax on it. And of course there's the idea of using your ISA allowance.