Tax on savings.

Vale123

Hi,

I was wondering if someone could clarify a few things for me please.

I am in receipt of a Civil Service Pension which uses up my personal tax allowance.
I have earned income (F/T) PAYE which is at Basic rate. 

I have savings, including a redundancy lump sum, which in previous years was mainly in ISA's then due to low rates savings have been put into non ISA savings.

As I understand, the £1,000 tax free savings interest stands alone from my earnings and earnings tax rates. Is this correct please?

I have never paid tax on interest before, I do believe my earned interest would have been below £1,000 previously, but due to better rates and a long term investment maturing this year, my interest earned will be above £1,000 for 2023/04.

So am I correct that the banks now automatically notify HMRC of interest earned?

How do they treat interest in joint accounts please?

If interest earned is above £1,000 I believe they will alter my tax code for the following year to collect the unpaid tax on interest. Is this correct please? 

And I believe that this will happen annually, with adjustments made each year accordioning to the interest earned in that year, probably running a year behind. Is that correct please? 

And if so do they advise you how the code change is arrived at?

Many thanks and sorry for the questions but hopefully my issues are clear. 

Flugelhorn

Banks tell HMRC who  amend your code, they send you a calculation which should explain it.

Joint accounts are split 50:50..

If the interest is above a certain amount you have to tell them - can't remember the amount as it seems to change every year

You have to keep an eye on it as don't always get it right. 

Katiehound

You certainly have to keep an eye on them as I had to pay tax on interest on an NS&I  bond which was a 'one-off', I then discovered they added the owed sum onto the bill for a couple of subsequent years....