Nube question on the payment of tax on interest on savings in bank accounts

Graham1982

Hello everyone:

This is probably a very simple question but I guess like all things, if you don't know the answer, it isn't that simple!

I currently have some savings stored in an instant access, no penalty savings account with a high street bank. The bank has stipulated that they do not deduct tax from interest at source so presumably the onus is on me to contact the relevant body (HMRC?) and pay them my dues.

Is this correct?

How do I go about this?

Can it be done online?

The money has only been in the aforementioned savings account for a couple of weeks. I know we are approaching the end of the tax year and therefore, a few quid (literally) will have been earned by then. Do I need to declare this during this year or is there a floor amount before I need to do this?

Thank you

Graham

InvesterJones

Nothing for you to worry about until you hit £10k of interest per year. The bank don't deduct tax, but they will report what interest is earned to HMRC, who will then take the tax due either from a tax code adjustment if you're in employment or via a simple assessment letter (which can then be paid online) if not. They initiate all of that, you don't need to do anything.

Given there is also a personal savings allowance unless you're in the top income band, you probably don't even owe anything.

Graham1982

Hello @InvesterJones:

Thank you, so I need to worry if I earn 10k of interest pa NOT if I have a significant balance in savings?

Considering I have earned 12 quid or so interest thusfar and this was earned within about a week, I assume the interest is calculated monthly. So even if I earned 15 quid a month interest, I would only be earning 180 quid total interest per year, this is below the 10k interest per year so no issue?

Thanks

Graham

Flugelhorn

InvesterJones said:

Nothing for you to worry about until you hit £10k of interest per year. The bank don't deduct tax, but they will report what interest is earned to HMRC, who will then take the tax due either from a tax code adjustment if you're in employment or via a simple assessment letter (which can then be paid online) if not. They initiate all of that, you don't need to do anything.

Given there is also a personal savings allowance unless you're in the top income band, you probably don't even owe anything.

I am finding that the bank (NS&I) are not reporting interest to HMRC. 2022/3 they missed out 2.5K so I filled in SA  and paid the bill - they acknowledge the payment and create new codes going forward which completely ignore any further interest going forward - presume will have to carry on with SA ..

Swipe

Flugelhorn said:

InvesterJones said:

Nothing for you to worry about until you hit £10k of interest per year. The bank don't deduct tax, but they will report what interest is earned to HMRC, who will then take the tax due either from a tax code adjustment if you're in employment or via a simple assessment letter (which can then be paid online) if not. They initiate all of that, you don't need to do anything.

Given there is also a personal savings allowance unless you're in the top income band, you probably don't even owe anything.

I am finding that the bank (NS&I) are not reporting interest to HMRC. 2022/3 they missed out 2.5K so I filled in SA  and paid the bill - they acknowledge the payment and create new codes going forward which completely ignore any further interest going forward - presume will have to carry on with SA ..

That's going to be a lot of money HMRC are missing out on then.

Notepad_Phil

Flugelhorn said:

InvesterJones said:

Nothing for you to worry about until you hit £10k of interest per year. The bank don't deduct tax, but they will report what interest is earned to HMRC, who will then take the tax due either from a tax code adjustment if you're in employment or via a simple assessment letter (which can then be paid online) if not. They initiate all of that, you don't need to do anything.

Given there is also a personal savings allowance unless you're in the top income band, you probably don't even owe anything.

I am finding that the bank (NS&I) are not reporting interest to HMRC. 2022/3 they missed out 2.5K so I filled in SA  and paid the bill - they acknowledge the payment and create new codes going forward which completely ignore any further interest going forward - presume will have to carry on with SA ..

What account was the money in? If I remember correctly they had (possibly still do) some multi-year accounts where NS&I were correctly only reporting interest to the HMRC at the end of the term, so if it was one of them then you may have incorrectly reported the interest too soon.

Flugelhorn

Notepad_Phil said:

Flugelhorn said:

InvesterJones said:

Nothing for you to worry about until you hit £10k of interest per year. The bank don't deduct tax, but they will report what interest is earned to HMRC, who will then take the tax due either from a tax code adjustment if you're in employment or via a simple assessment letter (which can then be paid online) if not. They initiate all of that, you don't need to do anything.

Given there is also a personal savings allowance unless you're in the top income band, you probably don't even owe anything.

I am finding that the bank (NS&I) are not reporting interest to HMRC. 2022/3 they missed out 2.5K so I filled in SA  and paid the bill - they acknowledge the payment and create new codes going forward which completely ignore any further interest going forward - presume will have to carry on with SA ..

What account was the money in? If I remember correctly they had (possibly still do) some multi-year accounts where NS&I were correctly only reporting interest to the HMRC at the end of the term, so if it was one of them then you may have incorrectly reported the interest too soon.

Just a bog standard direct savings (joint) account - annual interest paid on 1st April - DH also writes to them re his half but somehow  they do manage to adjust his tax code for future years..

Lois_and_CK

I thought it was £1k of interest a year before tax is paid (for basic-rate taxpayers)?

Dazed_and_C0nfused

Lois_and_CK said:

I thought it was £1k of interest a year before tax is paid (for basic-rate taxpayers)?

You thought wrong.

If is for some.  But some basic rate payers can have £5,999 interest taxed at 0%.

You need to factor in the savings starter rate band (when applicable).

Albermarle

Lois_and_CK said:

I thought it was £1k of interest a year before tax is paid (for basic-rate taxpayers)?

It is. However if you earn over £1K of interest you do not have to report it yourself to HMRC. The savings provider will send HMRC the info. Only if you earn over £10K in interest you have to report it to HMRC.
Some people like to check their personal tax account though to see if the figures have been reported correctly ( although not that simple in practice) 

Lois_and_CK

Albermarle said:

Lois_and_CK said:

I thought it was £1k of interest a year before tax is paid (for basic-rate taxpayers)?

It is. However if you earn over £1K of interest you do not have to report it yourself to HMRC. The savings provider will send HMRC the info. Only if you earn over £10K in interest you have to report it to HMRC.
Some people like to check their personal tax account though to see if the figures have been reported correctly ( although not that simple in practice) 

Ahh okay - that makes sense. Thank you.