Declaring Tax on Savings

InvesterJones

I'm a bit confused, while saying the previous question was addressed, are you in fact going back to your first question which I could perhaps paraphrase as: What happens if I earn over £10k of interest and I am employed?

The answer is you need to complete a self-assessment return. HMRC will eventually be notified by the banks how much interest you have earned, and will know that you need to complete a return - whether they subsequently prompt on this before or after it is due I don't know, but their prompting or not doesn't affect the requirement for you to do it.

Ozzig

silvercue said:

I thought the banks notify HMRC of the annual interest received and your records were updated based on this information.

Any charges will be notified by way of a calculation and tax code change.

Is that incorrect then? 

The banks will more than likely notify HMRC with a value.

However, the bone of contention, you declare what interest you have access to.

If you have a 5-year fixed term bond and get access to all the interest in year 5 you may find the banks notified HMRC of what was paid in each year. If you just declare this, you will not have access to the interest to pay the tax on it. 


 

silvercue

Ozzig said:

silvercue said:

I thought the banks notify HMRC of the annual interest received and your records were updated based on this information.

Any charges will be notified by way of a calculation and tax code change.

Is that incorrect then? 

The banks will more than likely notify HMRC with a value.

However, the bone of contention, you declare what interest you have access to.

If you have a 5-year fixed term bond and get access to all the interest in year 5 you may find the banks notified HMRC of what was paid in each year. If you just declare this, you will not have access to the interest to pay the tax on it. 


 

Thanks for reply.  That is interesting as HMRC Admins (who I beleive represent HMRC as employees, maybe I have that wrong) have said in replies to questions on the HMRC Community Forums that you do not have to do anything as the banks inform HMRC and they adjust your Tax Code automatically.  

Having said that, I have called HMRC (on other matters) and been given completely different answers by different agents.  

Ozzig

silvercue said:

Ozzig said:

silvercue said:

I thought the banks notify HMRC of the annual interest received and your records were updated based on this information.

Any charges will be notified by way of a calculation and tax code change.

Is that incorrect then? 

The banks will more than likely notify HMRC with a value.

However, the bone of contention, you declare what interest you have access to.

If you have a 5-year fixed term bond and get access to all the interest in year 5 you may find the banks notified HMRC of what was paid in each year. If you just declare this, you will not have access to the interest to pay the tax on it. 


 

Thanks for reply.  That is interesting as HMRC Admins (who I beleive represent HMRC as employees, maybe I have that wrong) have said in replies to questions on teh HMRC Community Forums that you do not have to do anything as the banks inform HMRC and they adjust your Tax Code automatically.  

There are lots of admins on the HMRC forums who contradict one another on the subject.

They will not complain if you pay the tax yearly, in fact, it may be beneficial to you to do so assuming you are not reliant on the interest to fund it.

A couple of the short ones ...
https://community.hmrc.gov.uk/customerforums/sa/9a7aaaaf-d382-ee11-a81c-6045bd0e4841#f7ccb3ad-d382-ee11-8179-6045bd12787b
https://community.hmrc.gov.uk/customerforums/pt/a3b6a407-5368-ee11-a81c-000d3a0cc0c2#e7d159f8-fd6b-ee11-9ae7-6045bd127b64

There are lots of much longer ones, some contradicting one another in the same long conversation.

The official line was given to MSE by HMRC confirming tax is taken on maturity when the saver has access.

eskbanker

jay_ftw said:

eskbanker said:

jay_ftw said:

I'm still unsure how it would work with an employed person paying PAYE?

Your question related to submitting partial information on a tax return, what are you now referring to by how would 'it' work?

Well being an employed person paying PAYE you’re not completing a self assessment are you?

Being an employee (or pensioner) subject to PAYE doesn't indicate whether or not self-assessment is needed, but one of the triggers for self-assessment is earning over £10K of savings interest (regardless of employment status), which is the context for this thread.

subjecttocontract

I prefer to complete a self assessment every year that includes my savings interest. I keep detailed records and so far this tax year I have 41 line entries for savings interest. At the end of the tax year I will be able to calculate exactly what my tax liability is and ensure HMRC have the correct calculation. I never look for absolute accuracy but I'm happy if mine and HMRC are similar.

silvercue

Ozzig said:

silvercue said:

Ozzig said:

silvercue said:

I thought the banks notify HMRC of the annual interest received and your records were updated based on this information.

Any charges will be notified by way of a calculation and tax code change.

Is that incorrect then? 

The banks will more than likely notify HMRC with a value.

However, the bone of contention, you declare what interest you have access to.

If you have a 5-year fixed term bond and get access to all the interest in year 5 you may find the banks notified HMRC of what was paid in each year. If you just declare this, you will not have access to the interest to pay the tax on it. 


 

Thanks for reply.  That is interesting as HMRC Admins (who I beleive represent HMRC as employees, maybe I have that wrong) have said in replies to questions on teh HMRC Community Forums that you do not have to do anything as the banks inform HMRC and they adjust your Tax Code automatically.  

There are lots of admins on the HMRC forums who contradict one another on the subject.

They will not complain if you pay the tax yearly, in fact, it may be beneficial to you to do so assuming you are not reliant on the interest to fund it.

A couple of the short ones ...
https://community.hmrc.gov.uk/customerforums/sa/9a7aaaaf-d382-ee11-a81c-6045bd0e4841#f7ccb3ad-d382-ee11-8179-6045bd12787b
https://community.hmrc.gov.uk/customerforums/pt/a3b6a407-5368-ee11-a81c-000d3a0cc0c2#e7d159f8-fd6b-ee11-9ae7-6045bd127b64

There are lots of much longer ones, some contradicting one another in the same long conversation.

The official line was given to MSE by HMRC confirming tax is taken on maturity when the saver has access.

Thanks. No wonder people get confused sometimes!  

alongtimetogoyet

Does anyone know if there is a tool where you can input your data to get an idea of what your tax is likely to be before actually completing the self-assessment.

Dazed_and_C0nfused

alongtimetogoyet said:

Does anyone know if there is a tool where you can input your data to get an idea of what your tax is likely to be before actually completing the self-assessment.

Why not just compete the Self Assessment return and view the calculation before filing the return?  

You can change whatever you want before submitting the return to HMRC.

ColdIron

Dazed_and_C0nfused said:

alongtimetogoyet said:

Does anyone know if there is a tool where you can input your data to get an idea of what your tax is likely to be before actually completing the self-assessment.

Why not just compete the Self Assessment return and view the calculation before filing the return?  

You can change whatever you want before submitting the return to HMRC.

Yes, it's a great 'what if' tool