Paying tax on income from savings

Elderone

Hi everyone 
Can you help please. I inherited some money. The interest I will get from it in my taxable accounts totals roughly £2250. I am employed and thought rightly or wrongly that the banks inform HMRC and they adjust my tax code to take the 20% off the £1250 after discounting my PSA. I would rather not have to fill out a tax return for the sake of paying £500 extra in tax.
Is it normal practise to have to inform the income tax people about an inheritance or is it all sorted out between the banks and them automatically or is it better to ring them?
Thanks

2010

The banks inform the HMRC what interest you have received for for the tax year ending 5th April 2020 in July/Aug this year. You don`t need to do anything.
If you owe tax, around about October you will get a P800 informing you what you owe and they will adjust your tax code to get the tax from you.
Just keep a record of all your interest for each tax year to make sure it tallys with HMRC.

Elderone

Thanks but the money went into my account in March this year so will it miss the deadline for the banks to inform HMRC this year?

xylophone

Thanks but the money went into my account in March this year 

Therefore in the tax year 2019-20 ( 6 April 2019 - 5 April 2020).

The banks inform the HMRC what interest you have received for for the tax year ending 5th April 2020 in July/Aug this year. 

eskbanker

Elderone said:

Thanks but the money went into my account in March this year so will it miss the deadline for the banks to inform HMRC this year?

Has it generated any income yet though, i.e. has any interest been paid?

xylophone

Has it generated any income yet though, i.e. has any interest been paid?

I see what you mean - it is unclear whether "the money" going into the OP's account in March is interest received in the tax year 2019-2020 or a deposit of capital from the inheritance.

Of course it would not be impossible for the cash to have been deposited in March and for interest to have been paid in March, depending on the terms of the account.

eskbanker

xylophone said:

Has it generated any income yet though, i.e. has any interest been paid?

I see what you mean - it is unclear whether "the money" going into the OP's account in March is interest received in the tax year 2019-2020 or a deposit of capital from the inheritance.

Of course it would not be impossible for the cash to have been deposited in March and for interest to have been paid in March, depending on the terms of the account.

Yes, the info presented so far is ambiguous but I was swayed by OP's reference to "The interest I will get from it....", which implied to me that the March money was capital rather than interest, but obviously OP can, and hopefully will, clarify!

Albermarle

Is it normal practise to have to inform the income tax people about an inheritance

You are confusing two issues. You do not need to inform anyone about any inheritance you receive. 

The taxman is only interested in any tax liability on returns generated from the money. They have no interest in where the money came from. 

Elderone

Sorry busy morning. The money in March was the inheritance itself not the interest from it.

2010

Elderone said:

Sorry busy morning. The money in March was the inheritance itself not the interest from it.

Wherever the money is, the T&C will tell you when the interest is paid and therefore which tax year.
But basically you do not have to do anything apart from keep a record of the exact amount of interest you get in each tax year.

Elderone

I had roughly £75 in interest paid on the 1/4/20 which had accrued since I received the inheritance in March. Thanks for all your help and sorry for not being very clear.