I've got £100,000 cash savings in my current account | Is Skipton Base-rate Savings the 1# choice?

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Comments

  • Swipe said:
    xylophone said:
    if you earn enough savings interest to generate a tax liability then HMRC will simply adjust your PAYE tax code to recover that - no self-assessment (or any discussion/action) needed!

    Not quite.

    https://www.gov.uk/apply-tax-free-interest-on-savings

    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.

    Thanks - But tbh I'll just stick with keeping myself off the Self-Assessment Database... ect  :)
    I used to think like you until I was forced to register for self assessment. Now I wouldn't have it any other way. I now know what I'm paying is correct and when it has to be paid by, and it's a doddle to pay by debit card.

    If I registered myself onto that database though I'd lose nearly £100 (per month / each month) via paying tax on this money I will be earning as profit each month... :|

    But so I will much prefer to keep & spend that £100 per month on myself.
  • eskbanker
    eskbanker Posts: 30,939 Forumite
    First Anniversary Name Dropper Photogenic First Post
    edited 11 December 2023 at 5:06PM
    Swipe said:
    xylophone said:
    if you earn enough savings interest to generate a tax liability then HMRC will simply adjust your PAYE tax code to recover that - no self-assessment (or any discussion/action) needed!

    Not quite.

    https://www.gov.uk/apply-tax-free-interest-on-savings

    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.

    Thanks - But tbh I'll just stick with keeping myself off the Self-Assessment Database... ect  :)
    I used to think like you until I was forced to register for self assessment. Now I wouldn't have it any other way. I now know what I'm paying is correct and when it has to be paid by, and it's a doddle to pay by debit card.
    If I registered myself onto that database though I'd lose nearly £100 (per month / each month) via paying tax on this money I will be earning as profit each month... :|

    But so I will much prefer to keep & spend that £100 per month on myself.
    Perhaps you missed it earlier, but you don't have any choice about whether or not you pay tax on the interest earned on those savings, unless you got them all into an ISA - it's nothing to do with self-assessment, but HMRC do the assessing for you, whether you like it or not, as the institution(s) will notify them about what they paid you, after which HMRC will adjust your tax code to collect the tax due via PAYE deductions....
  • Albermarle
    Albermarle Posts: 22,042 Forumite
    First Anniversary First Post Name Dropper
    Swipe said:
    xylophone said:
    if you earn enough savings interest to generate a tax liability then HMRC will simply adjust your PAYE tax code to recover that - no self-assessment (or any discussion/action) needed!

    Not quite.

    https://www.gov.uk/apply-tax-free-interest-on-savings

    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.

    Thanks - But tbh I'll just stick with keeping myself off the Self-Assessment Database... ect  :)
    I used to think like you until I was forced to register for self assessment. Now I wouldn't have it any other way. I now know what I'm paying is correct and when it has to be paid by, and it's a doddle to pay by debit card.
    I was taken out of self assessment and not allowed to carry on . Cue three years of issues and calls to HMRC that I had never needed to do before.
  • eskbanker said:
    Swipe said:
    xylophone said:
    if you earn enough savings interest to generate a tax liability then HMRC will simply adjust your PAYE tax code to recover that - no self-assessment (or any discussion/action) needed!

    Not quite.

    https://www.gov.uk/apply-tax-free-interest-on-savings

    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.

    Thanks - But tbh I'll just stick with keeping myself off the Self-Assessment Database... ect  :)
    I used to think like you until I was forced to register for self assessment. Now I wouldn't have it any other way. I now know what I'm paying is correct and when it has to be paid by, and it's a doddle to pay by debit card.
    If I registered myself onto that database though I'd lose nearly £100 (per month / each month) via paying tax on this money I will be earning as profit each month... :|

    But so I will much prefer to keep & spend that £100 per month on myself.
    Perhaps you missed it earlier, but you don't have any choice about whether or not you pay tax on the interest earned on those savings, unless you got them all into an ISA - it's nothing to do with self-assessment, but HMRC do the assessing for you, whether you like it or not, as the institution(s) will notify them about what they paid you, after which HMRC will adjust your tax code to collect the tax due via PAYE deductions....

    On their website it states that they don't deduct taxes...??


    https://www.skipton.co.uk/savings/easy-access/base-rate-tracker

    Additional information
    • The AER shows what the interest rate would be if interest was paid and added each year.
    • We pay all savings interest gross, which means no tax is deducted. It’s your responsibility to pay any tax due, based on your individual circumstances. Tax rules may change in future.
    • Accounts can be withdrawn from sale at any time and without notice.


  • xylophone
    xylophone Posts: 44,348 Forumite
    Name Dropper First Anniversary First Post
    We pay all savings interest gross, which means no tax is deducted. It’s your responsibility to pay any tax due, based on your individual circumstances

    The savings institutions report interest paid to HMRC - eventually this will be reflected in your tax code.


    https://www.gov.uk/apply-tax-free-interest-on-savings


    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.

  • eskbanker
    eskbanker Posts: 30,939 Forumite
    First Anniversary Name Dropper Photogenic First Post
    eskbanker said:
    Swipe said:
    xylophone said:
    if you earn enough savings interest to generate a tax liability then HMRC will simply adjust your PAYE tax code to recover that - no self-assessment (or any discussion/action) needed!

    Not quite.

    https://www.gov.uk/apply-tax-free-interest-on-savings

    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.

    Thanks - But tbh I'll just stick with keeping myself off the Self-Assessment Database... ect  :)
    I used to think like you until I was forced to register for self assessment. Now I wouldn't have it any other way. I now know what I'm paying is correct and when it has to be paid by, and it's a doddle to pay by debit card.
    If I registered myself onto that database though I'd lose nearly £100 (per month / each month) via paying tax on this money I will be earning as profit each month... :|

    But so I will much prefer to keep & spend that £100 per month on myself.
    Perhaps you missed it earlier, but you don't have any choice about whether or not you pay tax on the interest earned on those savings, unless you got them all into an ISA - it's nothing to do with self-assessment, but HMRC do the assessing for you, whether you like it or not, as the institution(s) will notify them about what they paid you, after which HMRC will adjust your tax code to collect the tax due via PAYE deductions....
    On their website it states that they don't deduct taxes...??

    https://www.skipton.co.uk/savings/easy-access/base-rate-tracker

    Additional information
    • The AER shows what the interest rate would be if interest was paid and added each year.
    • We pay all savings interest gross, which means no tax is deducted. It’s your responsibility to pay any tax due, based on your individual circumstances. Tax rules may change in future.
    • Accounts can be withdrawn from sale at any time and without notice.
    As above, that's just saying that Skipton don't deduct tax themselves, as they would have done prior to 2016, but since then all institutions have paid interest gross and the taxation is then a matter for the individual and HMRC.

    As Skipton will tell HMRC how much interest they paid you, HMRC can (and will) then automatically collect the tax due without you having any control over that, other than its timing, i.e. you can pay as a lump sum or have it collected via PAYE over the following tax year.

    If you really were under the impression that you could keep these earnings under the radar without any tax being collected, then it's definitely time to accept that this isn't the case!
  • Swipe
    Swipe Posts: 5,085 Forumite
    Name Dropper First Post First Anniversary
    edited 11 December 2023 at 7:05PM
    I assume the OP is talking about earning extra interest due to the collection via tax code happening much later and over an extended period compared to the Self Assessment deadline and also not having to be subjected to payment on account. I'd still take Self Assessment payment at deadline over the tax code collection method though.
  • eskbanker
    eskbanker Posts: 30,939 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Swipe said:
    I assume the OP is talking about earning extra interest due to the collection via tax code happening much later and over an extended period compared to the Self Assessment deadline and also not having to be subjected to payment on account. I'd still take Self Assessment payment at deadline over the tax code collection method though.
    That's a very charitable interpretation of OP's pretty clear intentions!
    If I registered myself onto that database though I'd lose nearly £100 (per month / each month) via paying tax on this money I will be earning as profit each month... :|

    But so I will much prefer to keep & spend that £100 per month on myself.

    It's not either/or though - sub-£3K self-assessment bills can still be collected via PAYE:

    You can pay your Self Assessment bill through your PAYE tax code as long as all these apply:

    • you owe less than £3,000 on your tax bill (you cannot make a part payment to meet this threshold)
    • you already pay tax through PAYE, for example you’re an employee or you get a company pension
    • you submitted your paper tax return by 31 October or your online tax return online by 30 December
    https://www.gov.uk/pay-self-assessment-tax-bill/through-your-tax-code
  • Swipe
    Swipe Posts: 5,085 Forumite
    Name Dropper First Post First Anniversary
    edited 11 December 2023 at 7:36PM
    eskbanker said:

    It's not either/or though - sub-£3K self-assessment bills can still be collected via PAYE:

    You can pay your Self Assessment bill through your PAYE tax code as long as all these apply:

    • you owe less than £3,000 on your tax bill (you cannot make a part payment to meet this threshold)
    • you already pay tax through PAYE, for example you’re an employee or you get a company pension
    • you submitted your paper tax return by 31 October or your online tax return online by 30 December
    https://www.gov.uk/pay-self-assessment-tax-bill/through-your-tax-code
    I'm aware of that. I still take Self Assessment payment at deadline over the Self Assessment tax code collection method though. 
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