Tax on Savings

my question isn't about the threshold but more about  "what happens".

Not this tax year but next tax year I will go over the limit for maximum of interest allowed on savings.  How does the process work? Does the government just send me a bill based on what Banks are telling it? or does it  send me an estimate and ask me to fill out a form to double check for other sources of income. (Currently I don't have any).

Replies

  • edited 3 November 2022 at 12:01PM
    refluxerrefluxer Forumite
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    edited 3 November 2022 at 12:01PM
    When you say you have no other income, do you mean you don't receive a salary or a pension ? If so, then you can potentially earn up to £18,570 in savings interest without paying tax.
  • QyburnQyburn Forumite
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    Our experience was that they amended tax code for the following tax year on the assumption that this interest would continue to be received.  When you say no other sources of income, is that literally the case?  If you have no other taxable income, you can receive (I think) £18,570 in interest before it would become taxed.
  • Dave_5150Dave_5150 Forumite
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    You need to complete a self assessment if you earn over £10,000 in savings interest in any tax year

    https://www.gov.uk/apply-tax-free-interest-on-savings 
  • SomeGuy2000SomeGuy2000 Forumite
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    ok that number is higher than I thought it was. I thought it was just 5000.

    but I suppose then the question is more hypothetical if I had gone over the limit, would HRMC send me a letter asking for a self assessment?
  • Dazed_and_C0nfusedDazed_and_C0nfused Forumite
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    ok that number is higher than I thought it was. I thought it was just 5000.

    but I suppose then the question is more hypothetical if I had gone over the limit, would HRMC send me a letter asking for a self assessment?
    If you earn over £10k in interest you are expected to register for Self Assessment and file a return even if no tax is actually due.

    If you don't do that HMRC are likely to send you a notice to file a return anyway at some point.

    For amounts less than that they will check the tax position with any other taxable income they are aware of (if there is any) and send you a calculation if any tax is owed.

    If you don't have a PAYE source where the tax can be collected in a future tax year you will pay it direct to HMRC, at the earliest by 31 January after the end of the tax year the tax is owed for.
  • Bigwheels1111Bigwheels1111 Forumite
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    I rang self assessment to ask them about this on Tuesday, as I will earn over 10k in interest next year.
    I’m a low earner and can get 15k interest before I pay tax.
    I was told they would send me a letter to inform me I need to do a tax return.
    I think it would arrive by October and return needed to be done by end of December or January I think it was.


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