Declaring Tax earned on savings accounts.

Aristotle67

Perhaps worth pointing out that if you don't have an ISA at this point in time you have until 5 April to open and fund an ISA (or ISAs if you open different types) using this year's allowance of £20,000; you could then open a new one from April 6 with your new allowance. ISAs often pay a lower rate of interest than other accounts because of the protection from tax, but there are some good deals around at present as we are in the "ISA season". 

I am in a position at present where I am making use of the ISA allowances to avoid tax but I am also thinking long term with these. I am no expert but, much like yourself, have received a lot of very good advice on this forum and continue to do so. 

Dazed_and_C0nfused

WestOxonGal said:

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)

I suspect you have got a front line adviser who has zero idea about the behind the scenes processes banks and building societies are obliged to follow.

KBZL

I have the same question. My savings interest will exceed my personal allowance this year. I am employed and have PAYE.

I found this advice on the HMRC forum which said the same thing - the financial institutions will report the interest paid this year and that will be used to set the tax code for next year.
Declarining savings interest - Community Forum - GOV.UK (hmrc.gov.uk)

"For savings interest this is classed as 'investment income' if someone receives more than £10,000 of investment income they are required to submit a Self-Assessment tax return to declare this.

If you are not required to complete a tax return, there is no set form for declaring investment income.

Financial institutions will declare savings interest that is not held in ISA accounts to HMRC, and we will update our records accordingly."

Looks like I don't need to do anything then.

Dazed_and_C0nfused

KBZL said:

I have the same question. My savings interest will exceed my personal allowance this year. I am employed and have PAYE.

I found this advice on the HMRC forum which said the same thing - the financial institutions will report the interest paid this year and that will be used to set the tax code for next year.
Declarining savings interest - Community Forum - GOV.UK (hmrc.gov.uk)

"For savings interest this is classed as 'investment income' if someone receives more than £10,000 of investment income they are required to submit a Self-Assessment tax return to declare this.

If you are not required to complete a tax return, there is no set form for declaring investment income.

Financial institutions will declare savings interest that is not held in ISA accounts to HMRC, and we will update our records accordingly."

Looks like I don't need to do anything then.

Just check that any tax calculation you are sent is correct.