Over PSA tax payment

duckson

If you go over your PSA in any given tax year and you are PAYE do you need to fill in a self assessment form or should the interest already be known by HMRC automatically (from what your banks etc have sent to them) and hence your tax code is then changed to recoup the relevant tax on the interest that is due?

eskbanker

The latter, unless your interest exceeds £10K.

duckson

Ok cheers. 

I guess the next question is what interest is included in what tax year if you have a 1yr fixed!!
Approx £1800 in interest from a 1yr fixed saver opened Nov ‘22 with Ikano bank. 

Interest is only paid at the end of the year this November, not sure if any portion of interest for Nov ‘22 to end of the tax year (even though not visible in the account) is reported and hence wouldn’t be counted in this tax year.

Beddie

duckson said:

Ok cheers. 

I guess the next question is what interest is included in what tax year if you have a 1yr fixed!!
Approx £1800 in interest from a 1yr fixed saver opened Nov ‘22 with Ikano bank. 

Interest is only paid at the end of the year this November, not sure if any portion of interest for Nov ‘22 to end of the tax year (even though not visible in the account) is reported and hence wouldn’t be counted in this tax year.

It will all count towards this tax year.

VNX

Tax on savings interest is payable in the tax year you have access to the interest.

Albermarle

VNX said:

Tax on savings interest is payable in the tax year you have access to the interest.

This is a debatable point ( as debated in many other threads) as some providers seem to furnish HMRC with annual interest data, with 2,3,5, 7 year fixed rate ,  even when the interest is not actually available. A grey area at best.

However this has no relevance to the OP, who only has a one year fixed rate,

duckson

Sorry another one!
Is a SA required to be submitted if say, for example, you earned a taxable income of £16k Pa and had interest of £1200 on top?

eskbanker

duckson said:

Sorry another one!
Is a SA required to be submitted if say, for example, you earned a taxable income of £16k Pa and had interest of £1200 on top?

No, unless HMRC specifically request you to self-assess, but they provide a self-check facility if you want to experiment with some figures:

https://www.gov.uk/check-if-you-need-tax-return

https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

duckson

Having had a look at the above the ‘checking’ link only asks if you earn’t less than £50k which would be a yes and then states you don’t need to do a self cert! It doesn’t ask for any specific numbers. 

Slightly confusing!

eskbanker

duckson said:

Having had a look at the above the ‘checking’ link only asks if you earn’t less than £50k which would be a yes and then states you don’t need to do a self cert! It doesn’t ask for any specific numbers. 

Slightly confusing!

Not sure exactly what you've entered, but when I follow it and put in total income of less than £50K, it continues to prompt with further questions (such as amount of savings interest), but if you've answered the questions honestly and accurately and it says you don't need to self-assess then no further action should be needed.

duckson

I'm PAYE so everything is no, earn less than £50k and the interest question is no as I earn under £10k from that source.

Also it states if you go over your PSA and I'm employed my tax code will be changed automatically, it doesn't say fill out a SA.
It does say 'If' I fill one out report any earnings on there but I don't! Also I need to fill out a SA if i earn over £10k from savings and investments, I don't though so this isn't applicable either.

So other replies saying I would need to fill out a SA doesnt seem to make sense with this.....

If you go over your allowance

You pay tax on any interest over your allowance at your usual rate of Income Tax.

If you’re employed or get a pension, HMRC will change your tax code so you pay the tax automatically. To decide your tax code, HMRC will estimate how much interest you’ll get in the current year by looking at how much you got the previous year.

If you complete a Self Assessment tax return, report any interest earned on savings there.

You need to register for Self Assessment if your income from savings and investments is over £10,000. Check if you need to send a tax return if you’re not sure.

If you’re not employed, do not get a pension or do not complete Self Assessment, your bank or building society will tell HMRC how much interest you received at the end of the year. HMRC will tell you if you need to pay tax and how to pay it.