Paying tax on the interest earned over my £500 Personal Savings Allowance?

Bladerunner123

Hello

I am about to open a UK fixed rate savings account (not an ISA) and am a higher rate tax payer. The intertest earned in the first year will exceed my yearly £500 Personal Savings Allowance.
My question is related to how the tax is paid on the earned interest above my £500 Personal Savings Allowance?
Having searched the web, I can’t seem to find a definitive answer as to how or who does this and have found the following answers:
1.    I will need to submit a self-assessment tax return and declare the earned interest above the £500 Personal Savings Allowance as addition income
2.    The savings institution will deduct the required tax on earned interest above the £500 Personal Savings Allowance automatically on my behalf
3.    The tax office adjusts my PAYE tax coding to collect the additional tax owed – but who tells the tax office to do this, Me or the savings institution?

Ideally, I would like the savings institution to deduct any owed tax on my behalf as I am currently not required to submit a self-assessment as my tax situation is very simple and would like to avoid now having to begin having to do it – extra hassle.

Many thanks in advance

Kind regards

Swipe

HMRC will know how much you earned from your bank who will report this to them and adjust your tax code accordingly the following tax year. You do not need to do anything.

Bladerunner123

Swipe said:

HMRC will know how much you earned from your bank who will report this to them and adjust your tax code accordingly the following tax year. You do not need to do anything.

Many thanks Swipe for the very quick reply.

That's a relief to know that the Bank will report intertest earnings to the HMRC, as did not really want to have to do a lot of extra tax admin every year.

KR

bsms1147

I’m PAYE and have never submitted a self assessment. Last tax year HMRC sent me a letter and asked me to provide them with all my accounts and the amount of interest each earned in the tax year. They then adjusted my tax code. I’m assuming they will send me the same letter with the same request in a few months time. Their system of receiving interest amounts from banks doesn’t appear to be fully functional or reliable from their point of view, but it gave them enough of a heads up to ask me to provide the info myself.

Albermarle

You can access your Personal Tax Account online and check it this way and I think even supply the interest info. 

badger09

Swipe said:

HMRC will know how much you earned from your bank who will report this to them and adjust your tax code accordingly the following tax year. You do not need to do anything.

That's the theory, however, the system is definitely not foolproof and it is still your responsibility to ensure you pay the correct tax.
OP, unless you need to submit a Self Assessment for other reasons, the simplest way is to write to your tax office after the end of the relevant tax year and tell them what interest has been credited. Keep a copy of your letter and follow up if there is no change to your tax code.
Some people have been able to use their Personal Tax Account, but again, that system is not foolproof. 

colsten

If your only income is from employment and savings, filling in a self assessment is very quick once you have access to the self assessment system. You can then be sure it's all filed in a place you can easily find it in later, they work out your tax liability there and then, it's definitely delivered to HMRC, and you have HMRC's response filed with your declaration. If you have to pay extra, you can request that it's taken via a tax code update. If you are owed a refund, you can specify which account it should be paid into. 

Albermarle

colsten said:

If your only income is from employment and savings, filling in a self assessment is very quick once you have access to the self assessment system. You can then be sure it's all filed in a place you can easily find it in later, they work out your tax liability there and then, it's definitely delivered to HMRC, and you have HMRC's response filed with your declaration. If you have to pay extra, you can request that it's taken via a tax code update. If you are owed a refund, you can specify which account it should be paid into. 

HMRC seem to be pushing people away from self assessment , especially if their affairs are relatively straightforward.
I have filled in SA for years ( 40% taxpayer, extra pension contributions, savings interest etc ) but have been told to stop and go via the personal tax account for any changes in future.