interest on savings

Hello -
I am retired.
I have no income except interest from savings.  
(I am not drawings a pension). 
I am currently living off my interest and savings.
For this tax year 2023/2024 - I have so far received £12,103 in interest.
I estimate my total interest for 2023/2024 to be around £15k.
Do I have to pay tax on any of this? 

Comments

  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 12,821
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    SXX said:
    Hello -
    I am retired.
    I have no income except interest from savings.  
    (I am not drawings a pension). 
    I am currently living off my interest and savings.
    For this tax year 2023/2024 - I have so far received £12,103 in interest.
    I estimate my total interest for 2023/2024 to be around £15k.
    Do I have to pay tax on any of this? 

    If the interest is the only income you will receive in the current tax year then no.

    But HMRC would expect you to register for Self Assessment and file a tax return if your interest is £10k or more in the current tax year.
  • SXX
    SXX Posts: 237
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    Thanks Dazed and Confused.

    Until about a year ago, I used to do a self assessment to report rental income. I sold the rental property in 2022  and paid my CGT and then a few months later I received an email from HMRC to say I no longer need to do a self assessment. So should I re-start my self assessment even though the only income I receive is from savings interest.  (I am not drawing a pension and  don't expect to for a while).

  • Bigwheels1111
    Bigwheels1111 Posts: 2,262
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    Lucky you, if 15k interest you still have £3,570 to play with.
    Self assessment is required.
    Very simple to do.
    Register
    Wait until interest certificates are produced buy bank and building society etc.
    Login, fill out name, ni etc.
    Then it’s strange as you’re not employed or self employed. Limbo like me.
    No and no.
    Income section box 2, you’re done.
    The link is for 22-23, but gives you a good idea of what to do.
    https://assets.publishing.service.gov.uk/media/642ea04dfbe620000f17ddde/sfe_cyi_form_2324_o.pdf
  • eskbanker
    eskbanker Posts: 29,973
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    SXX said:
    So should I re-start my self assessment even though the only income I receive is from savings interest.
    Yes:
    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.
    https://www.gov.uk/apply-tax-free-interest-on-savings
  • SXX
    SXX Posts: 237
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    eskbanker said:
    SXX said:
    So should I re-start my self assessment even though the only income I receive is from savings interest.
    Yes:
    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.
    https://www.gov.uk/apply-tax-free-interest-on-savings
    Thanks to all.   
    It looks like I will need to complete a tax return for 2023/2024 to declare the interest from savings.  (A bit annoyed about that because when I received an email from HMRC in August 2023 stating the following I  thought YIPEE  I am never going to have to complete a self assessment again!)

    You don't have to send a tax return after the year ended 5 April 2023 unless:
    • your financial circumstances change
    • HM Revenue and Customs tell you to
  • eskbanker
    eskbanker Posts: 29,973
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    SXX said:
    eskbanker said:
    SXX said:
    So should I re-start my self assessment even though the only income I receive is from savings interest.
    Yes:
    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.
    https://www.gov.uk/apply-tax-free-interest-on-savings
    Thanks to all.   
    It looks like I will need to complete a tax return for 2023/2024 to declare the interest from savings.  (A bit annoyed about that because when I received an email from HMRC in August 2023 stating the following I  thought YIPEE  I am never going to have to complete a self assessment again!)

    You don't have to send a tax return after the year ended 5 April 2023 unless:
    • your financial circumstances change
    • HM Revenue and Customs tell you to
    Did you earn more than £10K worth of savings interest in 2022/23?

    You'll no doubt be familiar with the process anyway, but it doesn't seem particularly onerous if your finances are simple enough to be on the borderline between self-assessing and not?
  • SXX
    SXX Posts: 237
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    eskbanker said:
    SXX said:
    eskbanker said:
    SXX said:
    So should I re-start my self assessment even though the only income I receive is from savings interest.
    Yes:
    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.
    https://www.gov.uk/apply-tax-free-interest-on-savings
    Thanks to all.   
    It looks like I will need to complete a tax return for 2023/2024 to declare the interest from savings.  (A bit annoyed about that because when I received an email from HMRC in August 2023 stating the following I  thought YIPEE  I am never going to have to complete a self assessment again!)

    You don't have to send a tax return after the year ended 5 April 2023 unless:
    • your financial circumstances change
    • HM Revenue and Customs tell you to
    Did you earn more than £10K worth of savings interest in 2022/23?

    You'll no doubt be familiar with the process anyway, but it doesn't seem particularly onerous if your finances are simple enough to be on the borderline between self-assessing and not?
    Thanks - I did actually complete a self assessment for 2022/2023 as I had sold a rental property in Oct 2022 so I needed to report the rental income and I also declared the savings interest (of around £2/3k+) in that SA.  I am familiar with the process and obviously have a SA account so it won't be onerous but I am retired now so I really just want to put my feet up and never having to worry about filling out forms as  I've done more than my fair share of form filling!!  Anyway, no doubt I will complete a SA for 2023/2024 to declare my savings interest which should be around £15k!   Thanks to everyone for alerting me to this.
  • boingy
    boingy Posts: 1,173
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    If you want to avoid the tax return you need to get your taxable savings below £10k per year. The lazy solution is to wait a year or two when interest rates are likely to have fallen(!) but you really should be looking to get more of your savings into tax-free places, not just for this year but forever. You can put 20k per year into ISA(s). You can also put up to 50K into Premium Bonds. The return from the latter may be a bit lower that the interest you would receive after tax on the same sum but is not taxable.

    You also need to keep an eye on the future. Will you qualify for state pension? That will be taxable so is likely to significantly increase your tax due on earned interest so maximising your ISA usage between now and then is even more important. 


  • SXX
    SXX Posts: 237
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    boingy said:
    You can put 20k per year into ISA(s). You can also put up to 50K into Premium Bonds. 

    You also need to keep an eye on the future. Will you qualify for state pension? That will be taxable so is likely to significantly increase your tax due on earned interest so maximising your ISA usage between now and then is even more important. 

    Thanks - I will explore the ISA route.
    £50k premium bonds - Until a year ago, I used to put 'all' my savings in premium bonds.  But as the interest rates have increased it made sense for me move my money into savings accounts as I get a 'guaranteed' monthly income.  I will keep this under review.

    Yes I will qualify for a state pension in about 6 years time but I will no longer be earning the same amount of interest from savings as I will be using a large portion of my savings to top up on a property purchase in due course.  So when I come to take my state pension I should in theory have an income of around £15/£16k per year so should be able to avoid paying tax but will need to fill out a SA.

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