Savings Interest Tax Payment

RG2015

isasmurf said:

According to tax aid, any underpayment of £50 or lower should be written off

https://taxaid.org.uk/guides/taxpayers/tax-debt/paye

 HMRC say you have not paid enough tax

If HMRC’s calculation shows that you have underpaid tax of:

• Less than £50 for that year, then the tax should be written off. If you receive a letter asking for payment, call HMRC on 0300 200 3300 (or the number shown on the letter) and ask for the debt to be cancelled

Thanks for this useful information which suggests that the OP will not have to pay any tax on their savings interest.

I am a bit confused though. If an underpayment of up to £50 for a single tax year should be written off, why would HMRC send out a notice of underpaid tax payable?

If this is correct, then the notice should say it will be written off and no phone call would be required.

Dazed_and_C0nfused

RG2015 said:

isasmurf said:

According to tax aid, any underpayment of £50 or lower should be written off

https://taxaid.org.uk/guides/taxpayers/tax-debt/paye

 HMRC say you have not paid enough tax

If HMRC’s calculation shows that you have underpaid tax of:

• Less than £50 for that year, then the tax should be written off. If you receive a letter asking for payment, call HMRC on 0300 200 3300 (or the number shown on the letter) and ask for the debt to be cancelled

Thanks for this useful information which suggests that the OP will not have to pay any tax on their savings interest.

I am a bit confused though. If an underpayment of up to £50 for a single tax year should be written off, why would HMRC send out a notice of underpaid tax payable?

If this is correct, then the notice should say it will be written off and no phone call would be required.

Because it's a massive over-simplification.

Say you owe £300 and then your spouse applies for Marriage Allowance for that tax year and you now only owe £48.  Do you really think HMRC will just roll over and say oh don't bother with the £48 🤔.

If the op does only owe £20 to start with it may be they aren't asked to pay it retrospectively but it wouldn't stop the next tax years tax code from being adjusted provisionally on the basis the same interest will be received again.

RG2015

Dazed_and_C0nfused said:

RG2015 said:

isasmurf said:

According to tax aid, any underpayment of £50 or lower should be written off

https://taxaid.org.uk/guides/taxpayers/tax-debt/paye

 HMRC say you have not paid enough tax

If HMRC’s calculation shows that you have underpaid tax of:

• Less than £50 for that year, then the tax should be written off. If you receive a letter asking for payment, call HMRC on 0300 200 3300 (or the number shown on the letter) and ask for the debt to be cancelled

Thanks for this useful information which suggests that the OP will not have to pay any tax on their savings interest.

I am a bit confused though. If an underpayment of up to £50 for a single tax year should be written off, why would HMRC send out a notice of underpaid tax payable?

If this is correct, then the notice should say it will be written off and no phone call would be required.

Because it's a massive over-simplification.

Say you owe £300 and then your spouse applies for Marriage Allowance for that tax year and you now only owe £48.  Do you really think HMRC will just roll over and say oh don't bother with the £48 🤔.

If the op does only owe £20 to start with it may be they aren't asked to pay it retrospectively but it wouldn't stop the next tax years tax code from being adjusted provisionally on the basis the same interest will be received again.

But isn't that exactly what the taxaid.org.uk statement is saying, that HMRC will not bother if it is under £50.

Dazed_and_C0nfused

RG2015 said:

Dazed_and_C0nfused said:

RG2015 said:

isasmurf said:

According to tax aid, any underpayment of £50 or lower should be written off

https://taxaid.org.uk/guides/taxpayers/tax-debt/paye

 HMRC say you have not paid enough tax

If HMRC’s calculation shows that you have underpaid tax of:

• Less than £50 for that year, then the tax should be written off. If you receive a letter asking for payment, call HMRC on 0300 200 3300 (or the number shown on the letter) and ask for the debt to be cancelled

Thanks for this useful information which suggests that the OP will not have to pay any tax on their savings interest.

I am a bit confused though. If an underpayment of up to £50 for a single tax year should be written off, why would HMRC send out a notice of underpaid tax payable?

If this is correct, then the notice should say it will be written off and no phone call would be required.

Because it's a massive over-simplification.

Say you owe £300 and then your spouse applies for Marriage Allowance for that tax year and you now only owe £48.  Do you really think HMRC will just roll over and say oh don't bother with the £48 🤔.

If the op does only owe £20 to start with it may be they aren't asked to pay it retrospectively but it wouldn't stop the next tax years tax code from being adjusted provisionally on the basis the same interest will be received again.

But isn't that exactly what the taxaid.org.uk statement is saying, that HMRC will not bother if it is under £50.

taxaid may say it but HMRC don't,

See Tax calcualtion already issued section here,

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye93075

benten69

Dazed_and_C0nfused said:

…but it wouldn't stop the next tax years tax code from being adjusted provisionally on the basis the same interest will be received again.

So in essence there is no way to stop HMRC adjusting the future tax codes? Just have to let them adjust it in 2025/26, let them see no more savings interest was accrued that year it was adjusted then put it back in 2027/28?

Seems like a total faff! Was hoping I could just not have HMRC adjust the tax codes at all 🤦🏽‍♂️

Dazed_and_C0nfused

benten69 said:

Dazed_and_C0nfused said:

…but it wouldn't stop the next tax years tax code from being adjusted provisionally on the basis the same interest will be received again.

So in essence there is no way to stop HMRC adjusting the future tax codes? Just have to let them adjust it in 2025/26, let them see no more savings interest was accrued that year it was adjusted then put it back in 2027/28?

Seems like a total faff! Was hoping I could just not have HMRC adjust the tax codes at all 🤦🏽‍♂️

Not quite.

You have two options, if you expect the actual interest to be less than the prior tax year then you can provide HMRC with your own estimate.

Or you can wait for them to review 2025:26 and they will refund any tax overpaid.

You can't get a tax refund through the tax code of a later tax year.

benten69

Thanks, as I suspected, when I said “put it back in 2027/28”, I meant put the tax code back to normal after seeing that I never earned the interest they assumed I would, was not referring to getting money returned.

However I think simply providing them a “more correct” estimate in the 2025/26 tax year should be fine and I can do that online via my Personal Tax Account.

Still a bit of a faff tho, but at least I know now…pay off any extra tax due at the end of 2024 / beginning of 2025, then in the 2025/26 tax year provide them a new estimate so they put my tax code back to what it should be and don’t just assume I will be due to pay tax on interest.

Ocelot

isasmurf said:

According to tax aid, any underpayment of £50 or lower should be written off

https://taxaid.org.uk/guides/taxpayers/tax-debt/paye

 HMRC say you have not paid enough tax

If HMRC’s calculation shows that you have underpaid tax of:

• Less than £50 for that year, then the tax should be written off. If you receive a letter asking for payment, call HMRC on 0300 200 3300 (or the number shown on the letter) and ask for the debt to be cancelled

A few years ago (circa 2005) I owed them £3, which they said they would claim back via my tax code over the following year. However they sent about £10 worth of letters demanding I pay it straight away, so I did.

The following year they owed me £75. I heard nothing for 6 months before contacting them, and they said I had to tell them I wanted the money back or they would keep it!

Who can tell?