Kent Reliance negative interest??

TheBanker

HMRC reporting is done on an annual basis, so I would assume (but do not know) that they will report the interest net of these deductions. I doubt the call centre will know exactly how HMRC reporting works. They might be getting mixed up with the penalty that applies for early withdrawal from a notice account - that is a fee even though it's calculated based on the interest rate. 

But as to whether it makes a difference... If your £50 calculation is correct, it only becomes a problem if you've exceeded your personal allowance, the savings starter rate (if you are eligible) and your personal savings allowance. I think you said you're a student so unless you have vast sums saved and/or a very well paid part time job, I think it's unlikely you'll actually pay any tax on the £50, even if it is incorrectly reported as interest earned. And if you do, it will be £12.50 per annum at basic rate.

If all of the above is correct, you could then work out how much interest you'd miss out on by either withdrawing earlier, or stopping using this account (i.e. how much would the next best account pay). If you'd save £12.50 in tax but miss out on £20 of interest, it's not worth doing. But if you miss out on £5 of interest to save £12.50 in tax then it is worth doing. 

TheBanker

Actually, just a thought - the original transaction/query dates back to 2022. So ask them for your 2022/3 certificate of interest and compare the total shown to what's gone through your account. What's on the certificate of interest should match what's been reported to HMRC. You might have to request the Certificate if it's not automatically produced, but they should be able to do it. 

ForumUser7

Thank you very much @thebanker - I’ve asked them for an annual interest - really good idea!

eskbanker

ForumUser7 said:
And as I now have my JISA maturity funds in there, it'll be larger amounts.

Just to pick up on this, post-maturity JISA funds should be in an account in the beneficiary's name - are these yours, i.e. have you just turned 18?

TheBanker

ForumUser7 said:

Thank you very much @thebanker - I’ve asked them for an annual interest - really good idea!

You're welcome. It's probably worth you reading this information too to understand how tax on savings works:

https://www.gov.uk/apply-tax-free-interest-on-savings

Because I think irrespective of whether they have over-reported to HMRC by £50, there won't be any tax to pay as it's going to fall within your allowances. 

ForumUser7

eskbanker said:

ForumUser7 said:
And as I now have my JISA maturity funds in there, it'll be larger amounts.

Just to pick up on this, post-maturity JISA funds should be in an account in the beneficiary's name - are these yours, i.e. have you just turned 18?

It’s a JISA that was in my name as I’ve recently turned 18. The funds are now in a standard easy access saving account in my name (being transferred to RSs in my name)

TheBanker said:

ForumUser7 said:

Thank you very much @thebanker - I’ve asked them for an annual interest - really good idea!

You're welcome. It's probably worth you reading this information too to understand how tax on savings works:

https://www.gov.uk/apply-tax-free-interest-on-savings

Because I think irrespective of whether they have over-reported to HMRC by £50, there won't be any tax to pay as it's going to fall within your allowances. 

Thanks for that link - I’ll be going to university so will likely not be in proper paid work (full time at least) until at least 3 or 4 years time. I think as I earn nothing from income etc. other than interest, based on that link, it looks like I can earn up to £18,570 per year in interest without having to pay tax, but HMRC will contact me to ask me to fill out a return if I earn above £10,000. So you’re right, that £50 would not matter one bit. Looks like I also didn’t need to be so concerned about taking funds out of a non-flexible ISA (that my JS&SISA matured into) either for now - as I don’t need to maximise tax free savings space

TheBanker

ForumUser7 said:

eskbanker said:

ForumUser7 said:
And as I now have my JISA maturity funds in there, it'll be larger amounts.

Just to pick up on this, post-maturity JISA funds should be in an account in the beneficiary's name - are these yours, i.e. have you just turned 18?

It’s a JISA that was in my name as I’ve recently turned 18. The funds are now in a standard easy access saving account in my name (being transferred to RSs in my name)

TheBanker said:

ForumUser7 said:

Thank you very much @thebanker - I’ve asked them for an annual interest - really good idea!

You're welcome. It's probably worth you reading this information too to understand how tax on savings works:

https://www.gov.uk/apply-tax-free-interest-on-savings

Because I think irrespective of whether they have over-reported to HMRC by £50, there won't be any tax to pay as it's going to fall within your allowances. 

Thanks for that link - I’ll be going to university so will likely not be in proper paid work (full time at least) until at least 3 or 4 years time. I think as I earn nothing from income etc. other than interest, based on that link, it looks like I can earn up to £18,570 per year in interest without having to pay tax, but HMRC will contact me to ask me to fill out a return if I earn above £10,000. So you’re right, that £50 would not matter one bit. Looks like I also didn’t need to be so concerned about taking funds out of a non-flexible ISA (that my JS&SISA matured into) either for now - as I don’t need to maximise tax free savings space

That's right. If you don't have a part time job or any other taxable income you can generate £18.570 per year in interest without worrying about tax. If you managed to get an average rate of 5%, you would need over £300k of savings to hit that. You will be a very popular student if you have £300k in the bank!

If you get part time work or a summer job/internship then obviously that will use up some of your allowance, but it's still unlikely to cause you a problem. And if it does, paying tax is no bad thing. Country's up to its eyeballs in debt and the NHS is on its knees, so every extra bit of tax will be gratefully received by our Government!

ForumUser7

Pleased to report, after receiving my requested annual interest statements, that Kent Reliance does indeed deduct negative interest for easy access accounts with no penalties, when they are trying to reclaim overpaid interest.

I.e. Gross Interest = Interest paid - Interest deducted.

I'm unsure why agents stuck to saying that it would be Interest paid only and not interest deducted, but at least I've got to the bottom of it now 😅