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How does HMRC know our savings amounts?

freeguy1984uk
Posts: 34 Forumite

Hi people,
How exactly does HMRC know if someone is earning over £1000 savings interest in a year?
I mean the Personal Savings Allowance.
I'm struggling to find the answer online.
I'm near to earning that much, and just can't figure out how HMRC would know that?
I can see they change your tax code for work to get their cut, but can't see how they know...
Thanks.
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Comments
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The providers will submit a report saying that they have paid X in interest to you. I can’t think of a bank or building society that doesn’t have my NI number, the PSA likely being why they now ask for it rather than only asking for it if you are applying to open an ISA. HMRC will compare that amount against any tax free allowance or PSA available to the individual with that NI number (whether £1,000, £500 or nil) to work out how much tax if any they need to recover.
If you are close to the limit or will pay tax, it’s worth checking the figures the bank give to ensure that you do not overpay due to an error in the information HMRC hold.
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The providers who pay you interest report it to HMRC, just like your employer does with your salary.1
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Banks, building societies etc report it to HMRC.1
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The organisations you save with and earn interest from report that interest to HMRC.
https://www.gov.uk/guidance/bank-and-building-society-interest-returns
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How can they report it if they don't have your NI? I've never been asked for mine for opening an account.I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe and Old Style Money Saving boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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Ayr_Rage said:The providers who pay you interest report it to HMRC, just like you employer does with your salary.
Unless you have accounts with a platform or aggregator (eg Raisin). They don't report, apparently.How's it going, AKA, Nutwatch? - 12 month spends to date = 2.56% of current retirement "pot" (as at end January 2025)0 -
Brie said:How can they report it if they don't have your NI? I've never been asked for mine for opening an account.
HMRC must have someway of matching the data the banks report with each person's tax record as on the whole it seems reasonably accurate.0 -
And how do they collect tax on savings interest?
So say I open a savings account with X and deposit enough to make £1100 interest over a year and I'm paid interest monthly.
That's over my £1000 PSA so as a regular PAYE employee on tax code 1257L.
What happens next?0 -
Some savings banks do ask for NI number, but all financial institutions must collect sufficient information to uniquely identify the individual they are doing business with (usually this will be through an ID check with a credit reference agency). The individual's full name, date of birth and 6 years of address history would normally be sufficient. HMRC will probably have enough of that to be able to cross reference.The data about individuals is included in the Type 3 records of the annual return, and includes name, address, postcode, NINO (if known), and DOB.
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Aminatidi said:And how do they collect tax on savings interest?
So say I open a savings account with X and deposit enough to make £1100 interest over a year and I'm paid interest monthly.
That's over my £1000 PSA so as a regular PAYE employee on tax code 1257L.
What happens next?2
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