HMRC and tax on interest

Band7

cragside said:

Sorry, I worded it badly. When I said I don't know how to work out all the interest myself, I meant that I don't know how to get an accurate running total during the tax year. I want to get ahead of the game as it were, and see if I'm on course to exceed the threshold.  I can count up my interest payments if they're monthly, but many are annual so there are a lot of unknown amounts.
From what everyone is saying though, HMRC won't know this figure either since the institution hasn't paid or reported it yet.

By the way the reason I want a running total, not one after April, is so that I can make decisions like fill up my cash ISA instead, or maybe increase my pension AVCs. Or just leave it and pay the tax of course 🙂

Tracking the actual interest as you receive it is easy to do. I do mine on an ongoing basis, so I know at any point in time how much I have earned so far.

Forecasting your total annual interest might not be quite as easy, especially if your balances and the interest rates vary. But you wouldn't get any forecast from HMRC, or any savings provider, either. If your rough estimate suggests you might bust your PSA, just put some money into an easy access ISA, e.g. the 3% Virgin Money one. Or even into a 1 year one at 4.25%. This would compare with 3.75% and 5.3%  in non-ISA accounts for BR tax payers and 5% and 7% for HR tax payers.

If your decision is between a non-ISA savings account and pension contributions, I would politely suggest you need to review the strategy for your retirement income provision.

Band7

trickydicky14 said:

Could someone show me some sort of sample of a spreadsheet for tracking interest as I would love to set one up but very new to spreadsheets.

Mine is part and parcel of my account tracking in my personal finance manager. I use AceMoney but MS Money or any other package will do, as would a spreadsheet, or even pen and paper. A package will have the advantage of inbuilt reports that let you see your current position at a moment's notice, and to slice and dice it - e.g. per financial year, per calendar year, per provider, per decade etc etc etc. You will obviously also be able to track your current accounts, credit cards, investments, and even gift card balances, so you can have an instant view on your total wealth at any point in time.

But I digress. For savings interest, I record all deposits and withdrawals, on an individual account basis, as and when they occur. An interest payment is just another deposit, categorised as taxable or non-taxable interest, depending on whether it's a non-ISA or ISA account. That way, I don't just have an up-to-date record of my interest position but also of my balance, for individual savings accounts as well as for all of them.

Whistler67

Closed **********************