Hargreaves Lansdown Active Savings - Income Tax

Dazed_and_C0nfused

simoriles said:

I am interested in the above thread. All the HMRC information re interest income implies HMRC will gather this information from the interest payers thus avoiding the need for the majority of taxpayers to file under self-assessment. This is particularly pertinent given that interest rates in 22/23 were high enough to trigger significant interest even on modest savings. I am dealing with a friend's situation for 22/23 whereby she has informed HMRC of interest income in the tax year as it exceeds £1,000 and HMRC have responded that none of the HL Active Savings Interest is on their system. HMRC need institution name, sort code and account number before they will tax the interest (they have in effect told my friend that she must be wrong) It appears that neither Hargreaves Lansdown nor the underlying institutions provide any information to HMRC. I did speak to HL about this a few months ago and they explained that Active Savings works in two ways 1) your money is held separately by the underlying institution in which case there may be a number, sort code etc 2) your money is pooled with other depositors in which case there is no further detail. It would seem that the only way round this is to register for self-assessment otherwise it seems impossible to report the income. i might suggest that HL should be giving this some thought as their clients are going to be impacted.  

i like the Active Savings model but this will become an issue if tax is unreported. 

Something definitely seems to be going wrong but I don't see any reason why you would have to register for Self Assessment to resolve this.

Assuming the total taxable interest is less than £10,000 anyone can simply provide HMRC with the correct details so they can issue the correct calculation.  

If she has done that (with details of the interest payer and bank account details) then it is upto HMRC to issue the calculation, she has declared the income.

If however her total taxable interest is £10k or more then yes, HMRC would expect her to register for Self Assessment.

ScarletBea

I send them a letter every year, with a copy of the tax statement from HL.
So far there hasn't been a problem, HMRC just adds that to the interest info received from the other institutions and adjusts the PAYE code.

Albermarle

 like the Active Savings model but this will become an issue if tax is unreported. 

As mentioned in previous threads the majority of people using the HL active savings will have no clue about this, so will be a big mess down the line.