Declaring Savings Interest through Self Assessment

wtiasa1997

For the current tax year my savings interest will be greater than £10,000 but less than £18,570. I will have no income from any other sources (I am a recent retiree and will not have any salary, pension, dividends, rental income, investment income etc for the current tax year and I have not transferred any of my Personal Allowance through Marriage Allowance.)   

My understanding is that as long as my savings interest does not exceed £18,570 for this tax year (ie £12,570 Personal Allowance, £5,000 Starting Savings Rate taxed at 0%, and £1,000 Personal Savings Allowance) then I will have no tax to pay on this savings interest. However, the HMRC site states that if your income from savings and investments is over £10,000 then you need to register for Self-Assessment and submit a tax return. 

It seems a bit of a pointless exercise for me to register for self assessment and submit a tax return solely because of my savings interest when I know that the level of savings interest I receive is such that there will be no tax to pay. My question is if I do not register and submit a tax return and HMRC subsequently find that I had savings interest of more than £10,000 in any given tax year, then can I be fined for non-submission even if the amount of tax due would be zero as I would have no other income in that tax year?    

    

eskbanker

Yes, if you're required to self-assess (as you are here) and fail to do so, then you face penalties:

You’ll get a penalty if you need to send a tax return and you miss the deadline for submitting it or paying your bill.

You’ll pay a late filing penalty of £100 if your tax return is up to 3 months late. You’ll have to pay more if it’s later, or if you pay your tax bill late.

You’ll be charged interest on late payments.

Estimate your penalty for Self Assessment tax returns more than 3 months late, and late payments.

You can appeal against a penalty if you have a reasonable excuse.

https://www.gov.uk/self-assessment-tax-returns/penalties

It may seem pointless to you but really isn't an onerous process, and isn't in any way invalidated by a net result of zero tax being payable, so just do it!

dales1

But remember, savings interest that comes from ISAs (and some NSI products) isn't taxable, so it doesn't go on your tax return.

Expotter

dales1 said:

But remember, savings interest that comes from ISAs (and some NSI products) isn't taxable, so it doesn't go on your tax return.

What about savings account that are open but have paid no interest ( or under £1), do you have to declare them?

TiVo_Lad

If they have paid no interest, there is no interest to declare. The tax point for interest is when it's paid and you can access it.

Beddie

When you say "It seems a bit of a pointless exercise" - you're right!

But they are the rules, so just go along with it. It won't take too long to do online, and once you've done it once you'll find it very quick and easy in future years.

LeafGreen

Can interest from Cash ISAs be ignored when working out whether savings interest exceeds £10,000?
i.e. if  for example I got £7,500 in interest from cash ISAs and a further £7,500 from regular savings accounts, would it be necessary to complete a tax return?

ColdIron

grahamgoo said:

Can interest from Cash ISAs be ignored when working out whether savings interest exceeds £10,000?

Yes

i.e. if  for example I got £7,500 in interest from cash ISAs and a further £7,500 from regular savings accounts, would it be necessary to complete a tax return?

No

Interest from cash ISAs can be considered as invisible to HMRC

spider42

Beddie said:

When you say "It seems a bit of a pointless exercise" - you're right!

But they are the rules, so just go along with it. It won't take too long to do online, and once you've done it once you'll find it very quick and easy in future years.

Actually, they aren't "the rules". The '"you must complete a Self Assessment return if your interest exceeds £10,000 rule" is just  HMRC guidance, it isn't the law.

The law only requires you to complete a Self Assessment return if HMRC has issued you with a notice requiring you to complete a Self Assessment return. A taxpayer who hasn't received such a notice has no obligation to complete a return, and neither do they have any obligation to register for Self Assessment (despite what HMRC say on their website). (Section 8 TMA1970)

The taxpayer has an obligation to notify HMRC if they owe some Income Tax or CGT. (Section 7 TMA1970). HMRC's response will often then be to issue a notice requiring a tax return. But if you don't owe any tax, then you have no obligation to do anything, regardless of whether the interest is above or below £10,000.

Dazed_and_C0nfused

spider42 said:

Beddie said:

When you say "It seems a bit of a pointless exercise" - you're right!

But they are the rules, so just go along with it. It won't take too long to do online, and once you've done it once you'll find it very quick and easy in future years.

Actually, they aren't "the rules". The '"you must complete a Self Assessment return if your interest exceeds £10,000 rule" is just  HMRC guidance, it isn't the law.

The law only requires you to complete a Self Assessment return if HMRC has issued you with a notice requiring you to complete a Self Assessment return. A taxpayer who hasn't received such a notice has no obligation to complete a return, and neither do they have any obligation to register for Self Assessment (despite what HMRC say on their website). (Section 8 TMA1970)

The taxpayer has an obligation to notify HMRC if they owe some Income Tax or CGT. (Section 7 TMA1970). HMRC's response will often then be to issue a notice requiring a tax return. But if you don't owe any tax, then you have no obligation to do anything, regardless of whether the interest is above or below £10,000.

I would agree with all of that except putting the two highlighted bits next to each other.

If a notice to file a return (or an actual return) is issued then you do either have to complete it or persuade HMRC to withdraw it.

Once issued the "no obligation" bit is redundant.

It will be interesting to see if HMRC decide to start issuing returns next summer when they become aware of more and more people receiving £10k in interest.

Bigwheels1111

Looking forward to getting mine next year.
As I’m already registered for self assessment it’s only a 20 minute job.
Apart from basic questions I’ve only got to fill in 2 boxes.