Personal Savings Allowance

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  • Atwill
    Atwill Posts: 21
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    All of which (many thanks) begs the question for me - why have I received a letter from HMRC re R40 claims for ye 2022, 2021, 2020, to say I have underpaid tax on all three years, and they will be posting me worked details for my attention.

    'Several hundreds of pounds' underdpaid are involved, the letter said, and yet, using the non HMRC sources such as MSE, Which, and many others, I not only do not owe tax, I could in fact (if I had the money) have obtained at least another £1,000 interest, on top of that received, for each year, still tax free.

    That being so, what calculator are they using? I shall only have a clue to that when I receive HMRC letter with worked details for each year.

    And I surely can't be the only one with such situation. 
  • RG2015
    RG2015 Posts: 5,755
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    Let's see what the letter says.
  • I doubt it's one the public has access to on the internet.

    If you read other parts of this forum you will find HMRC have issued plenty of supposedly incorrect calculations.

    But they are based on what the individual has told them, for example lots of people declare PPI refunds on form R40 when only the statutory interest element is taxable. 

    So they enter say £8,000 income with £300 tax when they should have entered £1,500 interest with £300 tax and not included the (non taxable) PPI refund.
  • Atwill
    Atwill Posts: 21
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    That is not the HMRC calculator I have been using. I did try that, and its results were even worse.

    The one I've been using is stccalculator.hmrc.gov.uk/UserDetails.aspx

    The fact I've been officially advised by a HMRC letter that 3 individual years are underpaid (details yet to be received) means not just me, but others with similar income/tax structures could be similarly affected. Their staff (hundreds) don't use their own methods, they use a standard formula for all tax payers, meaning many more people with savings interest will have their tax assessed similarly and wrongly.

    I should have mentioned much earlier that their letter gave the reason for underpayments was "because of Base rate Expansion" but I have failed to find a definition online anywhere close to it.

    Do any experts out there know or think they know what is meant? 








  • It's probably a reference to the basic rate being extended for Gift Aid or relief at source pension contributions.

    You clearly need to wait for the actual calculations as there is far more to this than first described.
  • Atwill
    Atwill Posts: 21
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    Sorry, there is absolutely no more to it than I have described, my Gift Aid is minimal, but, as you say I need to await their calcuations.

  • RG2015
    RG2015 Posts: 5,755
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    Atwill said:

    That is not the HMRC calculator I have been using. I did try that, and its results were even worse.

    The one I've been using is stccalculator.hmrc.gov.uk/UserDetails.aspx

    The fact I've been officially advised by a HMRC letter that 3 individual years are underpaid (details yet to be received) means not just me, but others with similar income/tax structures could be similarly affected. Their staff (hundreds) don't use their own methods, they use a standard formula for all tax payers, meaning many more people with savings interest will have their tax assessed similarly and wrongly.

    I should have mentioned much earlier that their letter gave the reason for underpayments was "because of Base rate Expansion" but I have failed to find a definition online anywhere close to it.

    Do any experts out there know or think they know what is meant? 


    Which one are you referring to when you say "That"?

    I have been using this one.

    http://stccalculator.hmrc.gov.uk/UserDetails.aspx
  • RG2015
    RG2015 Posts: 5,755
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    edited 11 July 2022 at 6:33PM
    RG2015 said:
    I am quite surprised to see that this calculator is still linked to a secure HMRC page.

    https://www.gov.uk/estimate-income-tax

    If you click on "estimate how much you should have paid in a previous year", then click on START NOW and you get to the calculator that is being discussed on this thread.

    I think @Atwill has identified a very useful issue here.

    Nevertheless, I cannot subscribe to the conclusion that HMRC are ripping us off.

    It is more case of being extremely careless in linking to an incorrect calculator page, that is over 6 years out of date. 
    I have just checked to notes on this and it says the following.

    For tax years 2016/2017 onwards, only include the amount of untaxed interest that is above your Personal Savings Allowance, for example if you are a basic rate taxpayer and the untaxed interest received was £1,200, enter £200.

    It wasn't initially obvious, but it is there, so I do apologise for maligning HMRC. To see this note you should click on UK interest that has not been taxed

    I am not sure, but if @Atwill, you have received £2,000 in interest, you should only enter £1,000 on the form. 

  • Atwill
    Atwill Posts: 21
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    Oh dear! So many variations on what should be a simple theme - how to calculate income tax excluding interest of any kind. and how separately to calculate tax that might (depending on financial circumstances) be due.

    Martin Lewis's MSE website (and a host of other equally reputable and reliable sources) explained, very explicitly with easy to understand examples, how both sides of the equation work. 

    Until a few days ago I (nor any of my far better-informed friends) knew nothing of the £5,000 0% tax Starting Savings Rate.

    Now in my late 90's I have learned just about all there is to know, short of a well-kept secret by HMRC for either ignoring it, or misusing it. 

    I will hold my tongue hereon until I have received their explanatory details of why they want more tax from me (as I, Mr Lewis, and hosts of other financial experts believe) than they are legally entitled to.  
  • RG2015
    RG2015 Posts: 5,755
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    edited 11 July 2022 at 5:43PM
    I agree, tax is complicated, and we are just touching the edges here. It is dangerous to make assumptions anywhere, let alone concerning tax.

    Fortunately, there is a lot of information online. I had never heard of CIC before, but I guess you know more about that than me. If I want to find out, I will do my research.

    I still maintain that it is unnecessary to suggest that we are all being ripped off by HMRC without knowing the full details of how tax works.
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