How much to live on

Humboldt

https://forums.moneysavingexpert.com/discussion/comment/82049036#Comment_82049036

Morning @louby40, I had a similar experience when I retired. I knew that any interest earned from my accounts was minimal because our hard earned pennies are all tucked away in tax free savings, so I did a bit of research. I checked all of the statements online and was able to gain an exact figure fairly quickly. I then rang the tax office again and informed them of the amount, offering to provide them with the relevant statements should they wish. The individual on the other end of the phone accepted my figures and processed my tax refund, with the proviso that I would be liable to pay extra, should the amount differ when information was formally received. I am aware that actions are not always consistent and are dependant upon the individual you are speaking to, but worth a try. Fingers crossed 🤞

louby40

Hi Humboldt thanks for replying. It appeared he didn't really know what he was talking about as he asked me about an account I had in 2024 when I sold my house in May 20#& and I put a large amount of money into a high interest account for about 2 months before we finally exchanged contracts in July 2024. That bank was then closed down.

No doubt I do have other bits on interest accumulated here and there but one current account has since been closed down too. It really will be under £300 I imagine and will be a total pain to try and work out.

I may try though. Thanks

Lifematters

I thought HMRC had access to exactly what savings interest we earn. Aren’t the banks legally required to report it to them each year?

Nebulous2

https://forums.moneysavingexpert.com/discussion/comment/82050683#Comment_82050683

They are obliged to report it to them, and they do. However it is messy.

They report what you got last financial year, something like the middle of this one, and your financial circumstances could have changed substantially in the meantime. They then assess you as if you will continue to earn what you did that previous year. If you have underpaid tax in year 1, they they change your tax code to recover it in year 3.

Some banks also sell you three year products, that only pay out after that time, but report to HMRC that you've received the interest for a year when you haven't.

There are often threads about this in the savings and investment part of the forum. It is possible to get it fixed - as people here are saying, but it can be a bit of work.

Organgrinder

Ah yes. Dear old HMRC. Our tax system is so complicated! I've mentioned my situation before but the latest is almost impossible to work out.

For 2024/25 HMRC worked out I owe them approx £600 as that year my exam marking wasn't taxed at source. As a result my tax codes for this year were adjust to recover that.

But for 2025/26 HMRC decided to tax my exam marking using code CD0. That same tax year I made personal pension contributions of £9,500 gross on top on my teacher's pension. This was an increase of £3,000 on the previous year but HMRC won't do anything until they receive my pension statement which I sent them a couple of weeks ago. My tax code explanation is that as I am a 40% tax payer some of my savings interest will be taxed and they have adjusted my codes to reflect this.

The result of this is that HMRC will probably owe me about £200 for 2025/26.

But to further complicate matters HMRC are already collecting the underpayment for 2024/25 via a K code.

So this year I am....

Paying extra for the tax owed in 2024/25

Paying for an estimate of tax owed last year for savings interest which will no longer be due.

Receiving an adjustment to rate amount to offset pension payments which are incorrect because HMRC insist on waiting for my pension statement.

Which all sounds ok, except the above all assume I'm a 40% tax payer which I am not as my pension payments all offset the 40% tax I pay which also means the tax free savings interest figure of £500 is also incorrect as it should now be £1000.

I tried explaining to HMRC that if they put a standard tax allowance against my main earnings and a BR code on everything else it would balance out exactly. But no it has to be done this incredibly complicated way.

And to make matters worse my gross for this year will now fall below the higher rate threshold anyway!

middlewife

Hi organ-grinder. I am forced to "save" with the bank of HMRC each year as I work 6 hours a week on minimum wage and have a DB nhs pension and a "cappuccino" lgps pension which literally pays for 2 cappuccinos a week! They've split my personal allowance across all 3, despite me asking them not to, so always take a small amount each month, then send me at least 3 different tax codes in April and May, sometimes I get a refund, sometimes I don't.

My husband was made redundant last October. He'd been a higher rate tax payer. Eventually got a 4k refund in June, so 8 months wait, but hopefully when he draws his state pension in November and takes out an annuity his tax situation should be simplified. His mum is still with us at 96, should there be inheritance then that will further complicate things, however her homecare bill will eat through quite a bit.

I've long given up trying to work out HMRC, quick to bill you, slow to repay..…

Nebulous2

https://forums.moneysavingexpert.com/discussion/comment/82052797#Comment_82052797

Do you have an HMRC / gov.uk login? You can tell them what you expect to earn from each source and they will adjust the codes accordingly. They will also - though you may need to phone, allocate codes at your request. I've found updates through the website are usually actioned within 24-48 hours. I get an email to say my code has changed, and can log-in to see it.

Like you I had various sources, an LGPS pension and two different part-time incomes. From April fully retired I have an LGPS pension which takes up all my tax-free allowance and an NHS pension which is allocated a BR tax-code, meaning it is all taxed at the basic rate.

louby40

https://forums.moneysavingexpert.com/discussion/comment/82052569#Comment_82052569

My situation is crystal clear compared to yours. It's a very complicated system made worse by staff that don't seem to want to help or care!

I now have 4 of my 5 accounts statements showing interest (one of which is 11p). I just need to ring one bank tomorrow who I no longer have an account with.

louby40

I had an email yesterday saying that my tax code had changed after speaking to the gentlemen from HMRC on Friday…… it had changed to EXACTLY what it was the day before!

Organgrinder

https://forums.moneysavingexpert.com/discussion/comment/82053333#Comment_82053333

It's unbelievable at times. My tax statement from last year says I owe £600 or so. I logged on today to find they are collecting approx £200.

Truly unbelievable. Nothing has changed in their figures apart from my pension contributions. Not the latest one's either. They are using the gross figures I gave them 18 months ago. Why they didn't use these in November is beyond me. And they will change again hopefully to reflect the increased contributions.

It really is way too complex!