New Tax Code - Untaxed Interest

dad_researcher

Hi,  Just wondering if someonr can help me?  I have just received my new Tax Code Assessment and it seems to include a deduction of £60 for untaxed interest.  I do have some savings but certainly dont receive anywhere near the threshold that Martin Lewis often mentions of £1,000 interest before tax becomes liable.  The note attached says it is 'an estimate of the interest I will receive during the year' and has been deducted from my tax-free allowance.  Any idea how I can challenge this?  TIA

chrisbur

Will this result in you paying any tax?

zagfles

Do they expect you to earn below the personal allowance? The PAYE system doesn't properly cope with people expected to earn less than the personal allowance, they deduct expected interest, even within the savings allowance, from tax code. This is utterly pointless and can cause major problems (did with someone I know), but many/most people it doesn't make any difference, although it remains pointless.

So what effect is it having on you?

EasyPWC

dad_researcher said:

Hi,  Just wondering if someonr can help me?  I have just received my new Tax Code Assessment and it seems to include a deduction of £60 for untaxed interest.  I do have some savings but certainly dont receive anywhere near the threshold that Martin Lewis often mentions of £1,000 interest before tax becomes liable.  The note attached says it is 'an estimate of the interest I will receive during the year' and has been deducted from my tax-free allowance.  Any idea how I can challenge this?  TIA

Had a similar experience, Assessment said I had £260 of untaxed interest. When I contacted HMRC they held details of several  defunct bank accounts, I assume they assumed I was still getting interest on those accounts. Now sorted.

Thrugelmir

Logging onto your personal tax account and amending estimated information is very simple to do. 

LMS123

I have just received the same on my tax coding notice. Untaxed interest estimate of £141.
My annual income is £15000. 
I had understood that my total income, including interest  had to be £18570 before tax was due on interest , made up of the starter savings rate plus £1000 PSA.
Could someone explain how this works?
I thought that my income of £15000 is deducted from £18570, leaving me able to earn £3570 in interest before it is taxed.
There's no way I would earn this in the next tax year. The tax coding notice states that the starter savings rate and PSA have been taken in to account.

Dazed_and_C0nfused

LMS123 said:

I have just received the same on my tax coding notice. Untaxed interest estimate of £141.
My annual income is £15000. 
I had understood that my total income, including interest  had to be £18570 before tax was due on interest , made up of the starter savings rate plus £1000 PSA.
Could someone explain how this works?
I thought that my income of £15000 is deducted from £18570, leaving me able to earn £3570 in interest before it is taxed.
There's no way I would earn this in the next tax year. The tax coding notice states that the starter savings rate and PSA have been taken in to account.

You need to breakdown the £15,000 into different types of income

 
How much is employment/company or private pension?
How much State Pension

How muc interest?
How much dividends?

I suspect you have spare Personal Allowance needing to be used but insufficient info to know for certain.

Can you also confirm what your tax code is and how much you expect to get from that specific source of income the tax code is for.

LMS123

Hi. £15000 is split 50/50 state and work pension. No other income.
I expect both to increase next tax year plus an increase in interest on savings which may just tip me over the threshold.
I am moving some savings in to a newly opened ISA to help mitigate. I appreciate the interest is lower than , say, a fixed rate account.
In fact, I've just looked at the full income for this year and it's more than the £15000 so that, together with interest rate rises, may be the reason for projected untaxed interest.
If my efforts to mitigate untaxed interest work I.e. moving some savings to the ISA, , will HMRC refund me automatically or would I have to apply for a refund? Or can I alter this somehow on my personal tax account so that the correct tax code is applied in April?

eskbanker

LMS123 said:

£15000 is split 50/50 state and work pension. No other income.

[...]

In fact, I've just looked at the full income for this year and it's more than the £15000 so that, together with interest rate rises, may be the reason for projected untaxed interest.

But you're saying that you have savings interest too?  This is taxable income (except from tax wrappers such as ISAs), even if taxed at 0% (a subtle distinction), so you need to identify all of your non-ISA income in order to understand the taxation situation.

LMS123

OK thanks.