Tax on savings interest.

Benny2020

Received a letter today from HMRC asking me to fill in a BBSI form as they believe i have unpaid tax on my savings interest.
Just done a quick tot up and i earned about £605 in interest in the last tax year.
Got made redundant last July and earned £22135 and paid £4381 tax and believe i am entitled to some tax back as i did not earn anything 
else in the last year except £1900 JSA, could this be why they are asking about interest paid? 
Am i allowed to earn £605 interest tax free?

Jeremy535897

On those figures, there is no tax due on interest as you are a basic rate taxpayer and the interest is £1,000 or less. If the £4,381 is tax, not tax and NIC, and even if all the JSA is taxable (see https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim76222 ), you have overpaid tax of £2,074.

Benny2020

Yes, that was my thought as well, just don't know why they want to know about the interest.
How long does it take to get a tax rebate?

[Deleted User]

Also important not to include any redundancy payment in that £22135

unholyangel

Benny2020 said:

Received a letter today from HMRC asking me to fill in a BBSI form as they believe i have unpaid tax on my savings interest.
Just done a quick tot up and i earned about £605 in interest in the last tax year.
Got made redundant last July and earned £22135 and paid £4381 tax and believe i am entitled to some tax back as i did not earn anything 
else in the last year except £1900 JSA, could this be why they are asking about interest paid? 
Am i allowed to earn £605 interest tax free?

Did you apply for a refund due to being made redundant? If so, yes....that is why they are asking about the interest paid as they need to know all your income before they can calculate how much of a refund you are due. 

Benny2020

The £22135 included the taxable part of the redundancy payment (over £30,000)
And yes i applied for a refund but it appears they are waiting for my P60 to come from my previous employer.

Dazed_and_C0nfused

Employers do not send P60's (or the old HMRC copy, P14) anymore, they file Real Time Information reports each time you are paid.

If you have proactively claimed a repayment then HMRC will want details (at individual bank account level) of the taxable interest you received in 2020:21. 

It may well be that all your interest falls to be taxed at 0% but until they have those details they won't know that for sure.  If you don't want to provide the information then the banks will eventually submit it but they have until 30 June to do so for the 2020:21 tax year so you would be waiting a few months for any tax refund due.

Benny2020

Ok, its starting to make sense now, i have 8 interest paying accounts although some paid less than £1 in the last year.
I will have to estimate the amount of interest for some accounts as they pay jan to dec rather than april to april but its around £605 as far as i can tell.

Dazed_and_C0nfused

As the tax year has ended why would you need to estimate anything?

Benny2020

Don't get final figures from the banks until next month, had a look online and there is nothing so had to add up monthly income and estimate fixed jan to dec accounts to april to april.

Jeremy535897

Benny2020 said:

Don't get final figures from the banks until next month, had a look online and there is nothing so had to add up monthly income and estimate fixed jan to dec accounts to april to april.

You declare the interest received in the tax year, which has ended. You shouldn't have to estimate anything.