How does HMRC know our savings amounts?

Dazed_and_C0nfused

poppystar said:

Even if someone pays the tax direct in year 1 then aren’t HMRC going to fiddle with/change the tax code for subsequent years on the assumption that that amount of interest will continue? Or is there a way to stop them doing that? 

Yes they will normally do that.

You can provide your own estimates if you wish but say the estimate from the prior year was £1,800 and you provided more upto date figures which showed you expected to receive £1,400 then the tax due on that £1,400 will still be collected via your current tax years tax code.

 

Suzycoll

freeguy1984uk said:

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.

As far as I am aware..... if you have an ISA you are asked for your National Insurance number and HMRC link the interest paid to this. For other savings accounts I dont  think banks ask for your NI number for other savings accounts. However, they have to report all interest paid to HMRC & I assume HMRC link to your personal data.

It may also be worth nothing - if you claim benefits DWP are also able to link with HMRC to check interest paid. So if you have not reported savings to DWP they will find out anyway (I'm not saying this is the case for you just pointing it out)

Shylock_249

RG2015 said:

Shylock_249 said:

RG2015 said:

Shylock_249 said:

RG2015 said:

Kim_13 said:

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.

I asked this question (whether HMRC have overstated interest on your P800) on the tax board and nobody has responded as yet.

My conclusion would be that HMRC may understate, if a bank doesn't report interest, but never overstate it.

Well I can confirm that they do get it wrong.  I contacted HMRC and asked for a print out of the details they held on my account for FY 2022 - 23. They sent a list containing 18 entries both "Estimates" and "Actual".  Of the 18 only 7 were actual accounts.  The actual figures were correct, these being the figures submitted by the financial institutions.  I phoned HMRC and went through the details. The assistant deleted spurious entries.  One building society had yet to submit their figures; the assistant said they should have the details by (IIRC) 21 September.  Eventually after going through the figures, waiting until the building society reported and requesting an updated list my figure and HMRC's agreed.  They sent me a P800 and I paid the money I owed them rather than have them correct the figure through PAYE.

My wife is the joint holder of all our taxable accounts, therefore her figures should be the same as mine.  I requested a list of her figures, phoned through the differences with the assistant. I thought that was that but last week my wife received her P800 and the figure shown for BBSI (Banks and Building Society Interest) is higher by £197.00 (£196.58), so I shall have to phone them again and ask for a list and phone through the discrepancies.

I am only asking about P800 interest figures.

I am not referring to estimates used for a tax year that is yet to be assessed. Were your 11 estimates included on your P800 and hence part of the calculation for tax due?

Regarding your wife’s P800, it is not clear yet that HMRC have overstated the interest figure for 2022/2023. However this will be established when you have the full breakdown.

Para 1. The figures on my wife's P800 are wrong.  HMRC have got it wrong.

Firstly, many thanks for sharing this information with us. However, I am a bit hazy on the figures on your wife's tax account.

You said earlier;

"......last week my wife received her P800 and the figure shown for BBSI (Banks and Building Society Interest) is higher by £197.00 (£196.58), so I shall have to phone them again and ask for a list and phone through the discrepancies."

Until HMRC give you the full list including the £196.58 you cannot say categorically that they have got it wrong.

At this point, either HMRC have included £196.58 in error or your have excluded an interest stream of £196.58.

From my perspective it would be very disturbing if HMRC had made an error. But I would prefer to know for sure and be prepared for this happening for me.

No need to eat my calculator. 

HMRC added an estimate to the actual figures. They have corrected it and state they will send out a new P800.  I've logged on and paid the tax owing, NOT wanting it to be paid off in monthly installments next year when we might have to Self Assess.

The guy on the end of the phone at HMRC this morning was really hard work.  He said he had NO means of printing off the revised lists. I pointed out that I'd had them previously, he then said he had found a way to do it and would put me on hold.  A further 25 mins on hold and I rang off.  On the positive side when I pointed out the error he made an immediate correction and gave me the revised figure owed by my wife.  After ring off I logged on to Government Gateway and the figure owed had reduced by approx £40 which I'd anticipated.  It makes me wonder that in previous years when they stated I'd had 8.8k in interest if that figure included estimates.  I've NO way of knowing as I didn't keep a record of the interest earned and didn't have the tax paying accounts in both our names.

RG2015

Shylock_249

Thanks for coming back. And as much as I am pleased that you have been proved correct, I am disturbed that HMRC have included an estimate on a P800.

As ever I will remain vigilant and never assume anything HMRC do is correct.

RedImp_2

Suzycoll said:

freeguy1984uk said:

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.

As far as I am aware..... if you have an ISA you are asked for your National Insurance number and HMRC link the interest paid to this. For other savings accounts I dont  think banks ask for your NI number for other savings accounts. However, they have to report all interest paid to HMRC & I assume HMRC link to your personal data.

It may also be worth nothing - if you claim benefits DWP are also able to link with HMRC to check interest paid. So if you have not reported savings to DWP they will find out anyway (I'm not saying this is the case for you just pointing it out)

Always find that as a bit of an anomaly considering ISA interest is not taxable.  Well having said that I assume is more to do with ISA limits?

Cloth_of_Gold

Suzycoll said:

freeguy1984uk said:

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.

As far as I am aware..... if you have an ISA you are asked for your National Insurance number and HMRC link the interest paid to this. For other savings accounts I dont  think banks ask for your NI number for other savings accounts. However, they have to report all interest paid to HMRC & I assume HMRC link to your personal data.

It may also be worth nothing - if you claim benefits DWP are also able to link with HMRC to check interest paid. So if you have not reported savings to DWP they will find out anyway (I'm not saying this is the case for you just pointing it out)

I opened an ISA recently and was asked for my NI number, but not when I opened a savings account, nor when I invested some money in a fixed rate bond. It seems strange.

wmb194

Cloth_of_Gold said:

Suzycoll said:

freeguy1984uk said:

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.

As far as I am aware..... if you have an ISA you are asked for your National Insurance number and HMRC link the interest paid to this. For other savings accounts I dont  think banks ask for your NI number for other savings accounts. However, they have to report all interest paid to HMRC & I assume HMRC link to your personal data.

It may also be worth nothing - if you claim benefits DWP are also able to link with HMRC to check interest paid. So if you have not reported savings to DWP they will find out anyway (I'm not saying this is the case for you just pointing it out)

I opened an ISA recently and was asked for my NI number, but not when I opened a savings account, nor when I invested some money in a fixed rate bond. It seems strange.

Depends on the institution. I've been asked for my NI number for non-Isa savings and brokerage accounts by some.