Tax on savings interest

bubblesaint

Hi
my wife and I have both exceeded the £1000 tax savings interest threshold for the last tax year. 

Will the taxman automatically work out what we owe them in tax or is it down to me to work out how much I owe them by adding up every penny from every source (nightmare)
regards
bub

Dazed_and_C0nfused

bubblesaint said:

Hi
my wife and I have both exceeded the £1000 tax savings interest threshold for the last tax year. 

Will the taxman automatically work out what we owe them in tax or is it down to me to work out how much I owe them by adding up every penny from every source (nightmare)
regards
bub

Have you factored in the Personal Allowance and savings starter rate band?

But assuming you don't normally complete Self Assessment returns and your interest doesn't reach £10,000 then there is nothing for you to do.

HMRC will notify you of the tax owed later this summer.

Normally it will be collected by adjusting your 2024:25 tax code but in some instances you might have to pay it direct.  Usually by 31 January 2024.

Ocelot

They normally work out what you owe in tax and lower your personally allowance accordingly. It can get quite confusing, so check they are doing it correctly.

Ceejay3000

If you have an online gov.uk tax account sometime later in the summer it should update with their calculation of tax for 2022-23 after they get the figures in from the savings providers. This is the time to check that they have got the interest figure correct.

Dazed_and_C0nfused mentions the starter rate band but this is not applicable to anyone who earns over £17,570 a year or has a non-standard tax code. Most working people only get the PSA, PDA & ISA allowances.

I am in the same position as you - from what I have gleaned from this forum any underpaid tax in the calculation will get reclaimed through next years tax code (i.e. 2024-25). However they will then use the same assumed figure of interest for the 2024-25 coding so our tax codes could get a 'double whammy' reduction even if we have taken measures to reduce taxable savings between now and then.

Just_caring

Ceejay3000 said:

If you have an online gov.uk tax account sometime later in the summer it should update with their calculation of tax for 2022-23 after they get the figures in from the savings providers. This is the time to check that they have got the interest figure correct.

Dazed_and_C0nfused mentions the starter rate band but this is not applicable to anyone who earns over £17,570 a year or has a non-standard tax code. Most working people only get the PSA, PDA & ISA allowances.

I am in the same position as you - from what I have gleaned from this forum any underpaid tax in the calculation will get reclaimed through next years tax code (i.e. 2024-25). However they will then use the same assumed figure of interest for the 2024-25 coding so our tax codes could get a 'double whammy' reduction even if we have taken measures to reduce taxable savings between now and then.

What do you mean by a non standard tax code please? 

Dazed_and_C0nfused

Just_caring said:

Ceejay3000 said:

If you have an online gov.uk tax account sometime later in the summer it should update with their calculation of tax for 2022-23 after they get the figures in from the savings providers. This is the time to check that they have got the interest figure correct.

Dazed_and_C0nfused mentions the starter rate band but this is not applicable to anyone who earns over £17,570 a year or has a non-standard tax code. Most working people only get the PSA, PDA & ISA allowances.

I am in the same position as you - from what I have gleaned from this forum any underpaid tax in the calculation will get reclaimed through next years tax code (i.e. 2024-25). However they will then use the same assumed figure of interest for the 2024-25 coding so our tax codes could get a 'double whammy' reduction even if we have taken measures to reduce taxable savings between now and then.

What do you mean by a non standard tax code please? 

Probably anything that's not 1257L.

But that doesn't mean you definitely won't have any savings starter rate band.

For example a pensioner could have code 400L because of State Pension (PA less State Pension 8570 = tax code allowances of 4000).

But if their annuity/occupational/drawdown pension is say £7,000 then there would still be £2,000 of the savings starter rate band available.

andyhicks88

Ceejay3000 said:

If you have an online gov.uk tax account sometime later in the summer it should update with their calculation of tax for 2022-23 after they get the figures in from the savings providers. This is the time to check that they have got the interest figure correct.

Dazed_and_C0nfused mentions the starter rate band but this is not applicable to anyone who earns over £17,570 a year or has a non-standard tax code. Most working people only get the PSA, PDA & ISA allowances.

I am in the same position as you - from what I have gleaned from this forum any underpaid tax in the calculation will get reclaimed through next years tax code (i.e. 2024-25). However they will then use the same assumed figure of interest for the 2024-25 coding so our tax codes could get a 'double whammy' reduction even if we have taken measures to reduce taxable savings between now and then.

so do we have to claim the money back if they keep the same code based on assumed figures but we've actually not gone over the threshold again? Or do they pay it back automatically?

Dazed_and_C0nfused

It's automatic.

https://www.gov.uk/tax-overpayments-and-underpayments

andyhicks88

Dazed_and_C0nfused said:

It's automatic.

https://www.gov.uk/tax-overpayments-and-underpayments

Thanks, because this seems likely to happen to me. I'm certain I will go over the PSA this tax year but think i'll fall under it next tax year.

Albermarle

andyhicks88 said:

Dazed_and_C0nfused said:

It's automatic.

https://www.gov.uk/tax-overpayments-and-underpayments

Thanks, because this seems likely to happen to me. I'm certain I will go over the PSA this tax year but think i'll fall under it next tax year.

Probably best to just let HMRC calculations take their course, as presumably we are not taking about large amounts.
However as advised worth keeping an eye on your personal tax account online, to check the figures look about right.

bubblesaint

Thanks all. 

I’m actually a ltd company director so I guess the accountant will be involved at some point…..