Declaring Tax earned on savings accounts.

WestOxonGal

I’m about to open a savings account would like to know how I declare interest for income tax purposes.
Before I retired I was taxed via PAYE and so have never had to complete a tax return.
My question is: will I have to complete a tax return for all of my income (pensions) (I’m still taxed by PAYE) or can can I declare just the interest earned by some other means?

fonesaver

If you are due to pay tax on your savings interest then you need to declare it to HMRC. If you are a basic rate tax payer you get a £1000 tax free allowance for interest so most people don't need to pay tax. HMRC has a form to complete or you can register for self-assessment.

eskbanker

No, there is no need to declare savings interest unless it exceeds £10K.

Savings providers report the interest to HMRC, who will make any necessary coding adjustments in order to collect any tax due in subsequent years - you may (by exception) need to correct their calculations if they're wrong, but the theory is that it's all taken care of....

Albermarle

WestOxonGal said:

I’m about to open a savings account would like to know how I declare interest for income tax purposes.
Before I retired I was taxed via PAYE and so have never had to complete a tax return.
My question is: will I have to complete a tax return for all of my income (pensions) (I’m still taxed by PAYE) or can can I declare just the interest earned by some other means?

Probably you will never have to pay tax on your savings anyway, but it depends on your level of savings and your other income.
Tax-free savings: check if you're eligible - Money Saving Expert

Also there are lots of recent posts on the forum on the subject, so have a read through.

WestOxonGal

eskbanker said:

No, there is no need to declare savings interest unless it exceeds £10K.

Savings providers report the interest to HMRC, who will make any necessary coding adjustments in order to collect any tax due in subsequent years - you may (by exception) need to correct their calculations if they're wrong, but the theory is that it's all taken care of....

Thank you.  HMRC advise though that interest is payable on interest earned above £1000.

Also, the savings provider that I’m planning to use (Allica) have advised me that they do not notify HMRC of interest earned and that it will be my responsibility to do this.  (They don’t seem to be alone with this policy).

If you could point me in the direction that could show me that no interest is payable unless it exceeds £10K I’d be very grateful as that would solve my problem as I would not need to notify HMRC.

eskbanker

WestOxonGal said:

eskbanker said:

No, there is no need to declare savings interest unless it exceeds £10K.

Savings providers report the interest to HMRC, who will make any necessary coding adjustments in order to collect any tax due in subsequent years - you may (by exception) need to correct their calculations if they're wrong, but the theory is that it's all taken care of....

Thank you.  HMRC advise though that interest is payable on interest earned above £1000.

Also, the savings provider that I’m planning to use (Allica) have advised me that they do not notify HMRC of interest earned and that it will be my responsibility to do this.  (They don’t seem to be alone with this policy).

If you could point me in the direction that could show me that no interest is payable unless it exceeds £10K I’d be very grateful as that would solve my problem as I would not need to notify HMRC.

I think you may have misunderstood - I didn't say that interest isn't payable unless it exceeds £10K, I said that it doesn't need to be declared (by the recipient, via a tax return) unless it exceeds £10K!

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

You need to register for Self Assessment if your income from savings and investments is over £10,000

It still needs to be paid once all allowances have been fully used, but that's a different matter and is addressed by HMRC collecting it, based on information received, rather than the recipient of the interest being required to notify them - I don't believe that any (UK FCA-regulated) savings providers are able to opt out of notifying HMRC of interest earned, what exactly have Allica said on the matter?

https://www.gov.uk/guidance/bank-and-building-society-interest-returns

HMRC requires UK banks and building societies to annually submit information about interest paid or credited to reportable persons.

This information is used to pre-populate customer tax accounts, it informs:

• the issue of PAYE notices of coding and tax calculations
• checks to make sure Self Assessment tax returns are accurate and complete

The following legislation gives HMRC the power to issue the notice requiring you to make a return:

• schedule 23 of the Finance Act 2011
• the Data-gathering Powers (Relevant Data) Regulations 2012 (regulations 5 to 10 inclusive cover the data HMRC can request)

HMRC will charge a penalty if you fail to comply with a notice to make a return.

This guidance will help you apply the regulations so you can make an accurate return. It represents HMRC’s interpretation of the legislation and replaces all earlier versions.

WestOxonGal

eskbanker said:

WestOxonGal said:

eskbanker said:

No, there is no need to declare savings interest unless it exceeds £10K.

Savings providers report the interest to HMRC, who will make any necessary coding adjustments in order to collect any tax due in subsequent years - you may (by exception) need to correct their calculations if they're wrong, but the theory is that it's all taken care of....

Thank you.  HMRC advise though that interest is payable on interest earned above £1000.

Also, the savings provider that I’m planning to use (Allica) have advised me that they do not notify HMRC of interest earned and that it will be my responsibility to do this.  (They don’t seem to be alone with this policy).

If you could point me in the direction that could show me that no interest is payable unless it exceeds £10K I’d be very grateful as that would solve my problem as I would not need to notify HMRC.

I think you may have misunderstood - I didn't say that interest isn't payable unless it exceeds £10K, I said that it doesn't need to be declared (by the recipient, via a tax return) unless it exceeds £10K!

You need to register for Self Assessment if your income from savings and investments is over £10,000

It still needs to be paid once all allowances have been fully used, but that's a different matter and is addressed by HMRC collecting it, based on information received, rather than the recipient of the interest being required to notify them - I don't believe that any (UK FCA-regulated) savings providers are able to opt out of notifying HMRC of interest earned, what exactly have Allica said on the matter?

HMRC requires UK banks and building societies to annually submit information about interest paid or credited to reportable persons

This information is used to pre-populate customer tax accounts, it informs:

• the issue of PAYE notices of coding and tax calculations
• checks to make sure Self Assessment tax returns are accurate and complete

The following legislation gives HMRC the power to issue the notice requiring you to make a return

HMRC will charge a penalty if you fail to comply with a notice to make a return.

This guidance will help you apply the regulations so you can make an accurate return. It represents HMRC’s interpretation of the legislation and replaces all earlier versions.

Thank you for your replies.

Allica replied to my query “ We do not notify HMRC regarding your interest earned, it is up to the customer to notify HMRC”

I have now replied to them with the information that you’ve given me above and await their response.

(I’ve had to edit out the links from your reply above as I’ve not been around here long enough to post links)

eskbanker

WestOxonGal said:
Allica replied to my query “ We do not notify HMRC regarding your interest earned, it is up to the customer to notify HMRC”

Ultimately any taxpayer is responsible for ensuring that they pay the correct amount of tax, so if Allica didn't notify HMRC, the onus would be on you to do so if it became apparent that HMRC were unaware of the interest.

35har1old

eskbanker said:

WestOxonGal said:

eskbanker said:

No, there is no need to declare savings interest unless it exceeds £10K.

Savings providers report the interest to HMRC, who will make any necessary coding adjustments in order to collect any tax due in subsequent years - you may (by exception) need to correct their calculations if they're wrong, but the theory is that it's all taken care of....

Thank you.  HMRC advise though that interest is payable on interest earned above £1000.

Also, the savings provider that I’m planning to use (Allica) have advised me that they do not notify HMRC of interest earned and that it will be my responsibility to do this.  (They don’t seem to be alone with this policy).

If you could point me in the direction that could show me that no interest is payable unless it exceeds £10K I’d be very grateful as that would solve my problem as I would not need to notify HMRC.

I think you may have misunderstood - I didn't say that interest isn't payable unless it exceeds £10K, I said that it doesn't need to be declared (by the recipient, via a tax return) unless it exceeds £10K!

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

You need to register for Self Assessment if your income from savings and investments is over £10,000

It still needs to be paid once all allowances have been fully used, but that's a different matter and is addressed by HMRC collecting it, based on information received, rather than the recipient of the interest being required to notify them - I don't believe that any (UK FCA-regulated) savings providers are able to opt out of notifying HMRC of interest earned, what exactly have Allica said on the matter?

https://www.gov.uk/guidance/bank-and-building-society-interest-returns

HMRC requires UK banks and building societies to annually submit information about interest paid or credited to reportable persons.

This information is used to pre-populate customer tax accounts, it informs:

• the issue of PAYE notices of coding and tax calculations
• checks to make sure Self Assessment tax returns are accurate and complete

The following legislation gives HMRC the power to issue the notice requiring you to make a return:

• schedule 23 of the Finance Act 2011
• the Data-gathering Powers (Relevant Data) Regulations 2012 (regulations 5 to 10 inclusive cover the data HMRC can request)

HMRC will charge a penalty if you fail to comply with a notice to make a return.

This guidance will help you apply the regulations so you can make an accurate return. It represents HMRC’s interpretation of the legislation and replaces all earlier versions.

Let's hope you don't have to fill in a return online 40 to 50 pages

eskbanker

35har1old said:

Let's hope you don't have to fill in a return online 40 to 50 pages

Completing a self-assessment return isn't a particularly onerous task for someone with pensions (that'll already be pre-populated) and some savings?

OP - not mentioned yet but are you making use of ISAs?

WestOxonGal

ISAs are also something that I’m looking at.