Account name removed - will interest be reported to HMRC correctly

Downthedrain

We removed my wife's name from a savings account with Aldermore in February of this year. The annual interest summary for the 22-23 tax year now shows all the interest for the year in my name. Should I assume this will be correctly apportioned when Aldermore reports interest earned to HMRC? If not, this will adversely affect my tax code.

molerat

When was the interest paid ?

If it was paid when you were the sole account holder it is all yours and taxable as such.

Interest ‘arises’ when it is received or made available to the recipient. Interest has been made available if it is credited to an 
account on which the account holder is free to draw.

https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2440

I suspect though it will be reported by them as all yours whenever it was paid.

Downthedrain

It's a monthly interest account, paid into our joint current account. I'll check with Aldermore. The question arises - is there any way to view what is reported to HMRC by banks and building societies?

Dazed_and_C0nfused

Downthedrain said:

It's a monthly interest account, paid into our joint current account. I'll check with Aldermore. The question arises - is there any way to view what is reported to HMRC by banks and building societies?

Not at the moment no.  You can ask for the details to be posted out to you though.

Downthedrain

Apologies for re-opening this, but I've only got to the bottom of this a few weeks ago;

I received notice of unpaid tax on interest for 22-23 and 23-24 and after pressing them for a breakdown of the interest (which the person I spoke to seemed resistant to doing) received a letter.

22-23 overstates my interest from Aldermore, as the bank declared all of the interest in my name. It's inflated my share by £300. The other interest reported is accurate.

22-24 is wholly inaccurate, being an estimated exact duplicate of the previous year. However, I had moved savings into ISAs, premium bonds, and my Wife's accounts (she doesn't currently pay tax). The total interest payments for 23-24 are below the £1000 threshold.

My tax code has now been adjusted to collect the claimed unpaid tax.

My questions are;

1. It it worthwhile telephoning HMRC about the Aldermore interest split, or is it best to write?

2. Will the estimated interest for 23-24 be corrected when HMRC gets the updated interest figures from the banks, or should I pursue this as well - I now have all the interest statements for my accounts.

RG2015

Question 2, HMRC will update 23-24 later this year, probably by October, and recalculate your tax. You could phone them to get it changed now, but that is your choice.

Question 1, I have had the HMRC report and the banks reported one interest figure for my joint accounts which was divided by 2 before being added to my total. Hence it is surprising that HMRC applied it all to you tax calculation.

Writing may be better as you can provide evidence from your Aldermore account that it is a joint account. However phoning would be quicker.

Downthedrain

Thanks. The issue in Q1 was that Aldermore incorrectly reported that all the interest was in my name due to me removing my Wife's name from the account partway through the year. HMRC acted on their figure. I had pre-empted this with Aldermore, but they didn't act accordingly. Other joint accounts have been correctly calculated as they've remained in joint names through the tax year(s).

Aldermore needed to have supplied two interest figures - one while the account was the joint names, and one while it was in my name only. I think the problem arises due to the account number not changing.

I wonder how many people have moved an account to or from joint names and paid too much tax, but haven't known?

Its frustrating that despite the repeated "do everything online" messages from HMRC, it's not possible to carry out the basic requirement of checking what the banks are submitting by looking online. It's inefficient having to ring them and ask for a breakdown, then wait weeks for the letter to appear.

Rather than going through ringing them up and getting nowhere (or cut off yet again), I'll try writing. I sent three letters over the past four years on different matters though and none have received a reply.