Tax on savings. Do I need to self declare?

am123

Apologies for this probably dumb question but I’ve not been in this position before and I can’t find an easy to understand answer. 

I had a lump sum of redundancy money which I put in an ISA a couple of years ago, however I didn’t want to put everything in there as I wanted easy access to some (I’m looking to buy a car), so I opened another savings account which now has approx £30k in. I assume I will need to pay tax on the interest earned in the easy access account, but do I need to self declare this? The only other time I had a decent amount of savings was a couple of decades ago, when the bank automatically paid tax for me, so I assumed that was still the case, however now I’ve realised no tax has gone out. I’m earning 4.8% on the £30k, I’m a higher rate tax payer (just moved into that bracket), PAYE. I believe I can now only earn £500 a year in interest tax free. Is that correct? 

Any help/info would be gratefully appreciated!

Dazed_and_C0nfused

am123 said:

Apologies for this probably dumb question but I’ve not been in this position before and I can’t find an easy to understand answer. 

I had a lump sum of redundancy money which I put in an ISA a couple of years ago, however I didn’t want to put everything in there as I wanted easy access to some (I’m looking to buy a car), so I opened another savings account which now has approx £30k in. I assume I will need to pay tax on the interest earned in the easy access account, but do I need to self declare this? The only other time I had a decent amount of savings was a couple of decades ago, when the bank automatically paid tax for me, so I assumed that was still the case, however now I’ve realised no tax has gone out. I’m earning 4.8% on the £30k, I’m a higher rate tax payer (just moved into that bracket), PAYE. I believe I can now only earn £500 a year in interest tax free. Is that correct? 

Any help/info would be gratefully appreciated!

ISA's are tax free.  Non ISA interest is all taxable although the first £500 (in your situation) may be taxed at 0%.

If your interest is less than £10,000 and you have no other reason to complete a tax return then you don't need to do anything, the bank will report the interest to HMRC after 5 April and HMRC will contact you if there is some tax to pay.

Could HICBC be something you need to think about?

am123

Thank you for your reply. I definitely won’t earn more than £10k in interest on the non ISA account, it’s around £115 month at the moment. That’s good to know, I was worried hmrc would come after me for not declaring and I’d be fined or something. 

I had to google HICBC! If I’ve searched correctly and you mean child benefit, then no, I don’t have children. 

Dazed_and_C0nfused

am123 said:

Thank you for your reply. I definitely won’t earn more than £10k in interest on the non ISA account, it’s around £115 month at the moment. That’s good to know, I was worried hmrc would come after me for not declaring and I’d be fined or something. 

I had to google HICBC! If I’ve searched correctly and you mean child benefit, then no, I don’t have children. 

Yes, HICBC is High Income Child Benefit Charge.

Not an issue for you but interest taxed at 0% is still taken into account when calculating HICBC for someone who is liable to it.

yorsiwel

Have you thought about premium bonds? Easy access savings accounts provide predictable (and usually better) interest, but premium bond prizes are tax free. There is a good article about premium bonds on the mse website.