Declaring Tax earned on savings accounts.

in Savings & investments
12 replies 749 views
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?
«1

Replies

  • edited 1 March at 3:43PM
    fonesaverfonesaver Forumite
    223 Posts
    Part of the Furniture 100 Posts Combo Breaker
    Forumite
    edited 1 March at 3:43PM
    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.
  • eskbankereskbanker Forumite
    25.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Forumite
    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....
  • AlbermarleAlbermarle Forumite
    16.3K Posts
    10,000 Posts Fourth Anniversary Name Dropper
    Forumite
    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.
  • WestOxonGalWestOxonGal Forumite
    4 Posts
    First Post
    Newbie
    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.
  • edited 1 March at 5:35PM
    eskbankereskbanker Forumite
    25.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Forumite
    edited 1 March at 5:35PM
    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:

    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.

  • WestOxonGalWestOxonGal Forumite
    4 Posts
    First Post
    Newbie
    eskbanker 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)
  • eskbankereskbanker Forumite
    25.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Forumite
    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.
  • 35har1old35har1old Forumite
    301 Posts
    100 Posts Name Dropper
    Forumite
    eskbanker 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:

    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
  • eskbankereskbanker Forumite
    25.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Forumite
    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?
  • WestOxonGalWestOxonGal Forumite
    4 Posts
    First Post
    Newbie
    ISAs are also something that I’m looking at.
Sign In or Register to comment.
Latest MSE News and Guides

Martin and MSE campaign win

April's 20% energy price guarantee hike postponed

MSE News

Childcare budget boost

More support for children from nine months and those on Universal Credit

MSE News

Energy Price Guarantee calculator

How much you'll likely pay from April

MSE Tools