Savings interest again....sorry

Easyjet77

Hello, can anyone clarify my position re tax due on savings interest.  Income: state pension £10600,   company pension £14900. Savings interest £900.   No other income.  Tax code : S324M Thanks

Dazed_and_C0nfused

No tax payable on the £900.

Tax would be payable once you tip over £1,000.

Easyjet77

Dazed_and_C0nfused said:

No tax payable on the £900.

Tax would be payable once you tip over £1,000.

Thanks for reply and information.  If the interest surpasses the £1000 and tax becomes payable, is there any effect if a considerable amount of the interest is from joint accounts, held with spouse?Thanks again

Newly_retired

Split 50:50.

Easyjet77

Newly_retired said:

Split 50:50.

How is that dealt with by hmrc? The full amount of interest from joint account shows in both our online tax accounts, as earned by each. IE £ 700 shows in both, not £350 each.

Shylock_249

I'm on a learning curve.  I contacted HMRC last week and asked them to provide a list of interest payments reported to them by banks and building societies.  My list turned up today. The list has 9 columns. Tax year, Sort Code, Acct No (they display the last 4 digits), Bank Name, Names on the Account (mine show 2 , ie self and wife, some of their old estimates show 1, where I was the sole account holder), Percentage of gross Interest (displays 50 or 100 in my case - I suppose if 4 people held the account it would show 25), Gross Amount, Gross apportioned amount, Source (and that's were it gets interesting - it shows "Actual - BBSI Pre-Pop (what ever that means) and Estimate C/F - BBSI Pre-Pop.

You could phone HMRC and ask for a copy of the list.  I suggested to the guy last week at HMRC that it would be a good idea to have that information available in the Government Gateway, he agreed and said he would forward the suggestion up through the chain of command.

Mine had 18 entries, 11 of them estimates, most from closed accounts I'd held in the previous (2021 - 22) tax year. All the actual ones were correct, they'd done the 50/50 split.  One account was missing but the HMRC guy said that banks had until 21 September to notify - I believe the usual date is in Jun.

Their estimate of my tax differs by £2059.49 in their favour because of the estimates from long gone closed accounts.

Good Luck

Easyjet77

Shylock_249 said:

I'm on a learning curve.  I contacted HMRC last week and asked them to provide a list of interest payments reported to them by banks and building societies.  My list turned up today. The list has 9 columns. Tax year, Sort Code, Acct No (they display the last 4 digits), Bank Name, Names on the Account (mine show 2 , ie self and wife, some of their old estimates show 1, where I was the sole account holder), Percentage of gross Interest (displays 50 or 100 in my case - I suppose if 4 people held the account it would show 25), Gross Amount, Gross apportioned amount, Source (and that's were it gets interesting - it shows "Actual - BBSI Pre-Pop (what ever that means) and Estimate C/F - BBSI Pre-Pop.

You could phone HMRC and ask for a copy of the list.  I suggested to the guy last week at HMRC that it would be a good idea to have that information available in the Government Gateway, he agreed and said he would forward the suggestion up through the chain of command.

Mine had 18 entries, 11 of them estimates, most from closed accounts I'd held in the previous (2021 - 22) tax year. All the actual ones were correct, they'd done the 50/50 split.  One account was missing but the HMRC guy said that banks had until 21 September to notify - I believe the usual date is in Jun.

Their estimate of my tax differs by £2059.49 in their favour because of the estimates from long gone closed accounts.

Good Luck

Thanks for info. I am currently  trying to get a better understanding  of the "tax on savings" situation  as I am nearing the tipping point.( as explained to me by dazed... above). We will be moving more into cash soon and I like to know the possible outcome/scenario.
      I'm usually very confident with figures and finance but I haven't had personal experience  with savings interest tax. Hence my queries.
  Thanks

Dazed_and_C0nfused

For most people the process works on a 3 year cycle.

Year 1
The interest is earned.

Year 2
The bank/building society reports the interest to HMRC
HMRC review you're tax for year 1 and issue a calculation of you have underpaid (or overpaid) tax.
If necessary HMRC update your year 2 tax code using the year 1 interest amount as estimate of the interest they expect you to receive in year 2.  Wherever possible they aim to collect the tax due for year 2 within that tax year.

Year 3
Your tax code will include any tax owed from year 1 and HMRC will also use the interest from years 1 as an estimate of what you will be expected to receive in year 3.
The bank/building society report the interest for year 2.......

If all the interest is taxed at 0% (like your £900) you won't see or be impacted most of the above.

Easyjet77

Dazed_and_C0nfused said:

For most people the process works on a 3 year cycle.

Year 1
The interest is earned.

Year 2
The bank/building society reports the interest to HMRC
HMRC review you're tax for year 1 and issue a calculation of you have underpaid (or overpaid) tax.
If necessary HMRC update your year 2 tax code using the year 1 interest amount as estimate of the interest they expect you to receive in year 2.  Wherever possible they aim to collect the tax due for year 2 within that tax year.

Year 3
Your tax code will include any tax owed from year 1 and HMRC will also use the interest from years 1 as an estimate of what you will be expected to receive in year 3.
The bank/building society report the interest for year 2.......

If all the interest is taxed at 0% (like your £900) you won't see or be impacted most of the above.

Very helpful once again. Much appreciated. Regards