Self Assessment

kjs31

I’ve had to register for self assessment this year due to receiving a decent amount of interest on my savings accounts. In the past I’ve always paid via PAYE and left it to HMRC to work out what I owe in relation to savings which have been lean pickings until fairly recently. 

HMRC have been changing my tax code throughout this year so whilst I have paid some of the savings interest tax owing it doesn’t account for all of it. 

When I complete my self assessment I assume that I add up the savings income and calculate the tax as if I haven’t paid any as yet and HMRC will deduct the amount I’ve already paid via PAYE from the eventual payment I will need to send them?

[Deleted User]

YOU enter on the employment section the tax which has been deducted under PAYE. 

This will be deducted from your liability as calculated. 

See box 2 below:

https://assets.publishing.service.gov.uk/media/642bd4d37de82b000c31351d/SA102-2023.pdf

Ayr_Rage

You fill in the details from your P60, which will show how much tax you have paid.

You enter the gross amount of savings interest.

Once you submit the return it shows a calculation with the amount of tax due.

You do not need to do the calculation yourself.

You can elect to pay it all at once by the following 31st January or have your tax code adjusted, there are boxes to tick for either option.

[Deleted User]

Ayr_Rage said:

You fill in the details from your P60, which will show how much tax you have paid.

You enter the gross amount of savings interest.

Once you submit the return it shows a calculation with the amount of tax due.

You do not need to do the calculation yourself.

You can elect to pay it all at once by the following 31st January or have your tax code adjusted, there are boxes to tick for either option.

Return must be submitted by 30th December in order for underpayment to be collected through PAYE. 

kjs31

Thanks all. I’m going to have to pay direct I think as I’m retiring in May and do not intend to draw from my pension until tax year 25/26. I think I will still owe them about 8k sadly. 

Ayr_Rage

If you owe that much you may also have to make Payments on Account as the system will predict that you will  continue receive a good amount of annual interest.

Some enlightened member will be along to advise the criteria for that.

Dazed_and_C0nfused

Ayr_Rage said:

If you owe that much you may also have to make Payments on Account as the system will predict that you will  continue receive a good amount of annual interest.

Some enlightened member will be along to advise the criteria for that.

Chapter and verse here

https://www.gov.uk/hmrc-internal-manuals/self-assessment-legal-framework/salf303

kjs31

Ayr_Rage said:

If you owe that much you may also have to make Payments on Account as the system will predict that you will  continue receive a good amount of annual interest.

Some enlightened member will be along to advise the criteria for that.

Thanks. I guess I’ll wait and see what I need to do once I’ve filed the tax return. I have almost 30k in interest landing in the next tax year too due to fixed rate bonds maturing and annual interest being paid then too. The last 18 months have been a bit different as I sold my house in 2022 and have had the funds mostly in easy access accounts whilst I looked for the right house to buy. It’s taken a while but I’ve finally found what I’m looking for and am due to complete around May time. As soon as the next tax year starts I’m going to stick whatever cash I don’t need for my house purchase into accounts where the interest won’t pay until 25/26 as I should be able to stay under the standard tax rate for that year. I’m going to exceed 100k taxable earnings in the upcoming tax year which I know is a nice problem to have but it’s a chunk of tax of course. 

kjs31

Dazed_and_C0nfused said:

Chapter and verse here

https://www.gov.uk/hmrc-internal-manuals/self-assessment-legal-framework/salf303

Thanks. Will need to read that again when I haven’t had a couple of glasses of wine …! 

Dazed_and_C0nfused

kjs31 said:

Dazed_and_C0nfused said:

Chapter and verse here

https://www.gov.uk/hmrc-internal-manuals/self-assessment-legal-framework/salf303

Thanks. Will need to read that again when I haven’t had a couple of glasses of wine …! 

The short version is POA (for the following tax year) will never be due if the liability is less than £1,000 or you have paid the majority of the liability via tax deducted at source (PAYE, CIS deductions etc).  Often known as the 80/20 rule.

One thing's that is easy to get wrong is that the requirement for POA are based on the previous years return.

So say for example you owe £8k for 2024-25 and POA are required for 2025-26 (£4,000 each in January and July 2026) but you expect your 2026-26 liability will only be say £500.  

Although your 2025-26 might only be £500 POA for that tax year are determined by the previous years return.  So you could make a claim to reduce each POA but only to £250 each.  If the liability for 2025-26 was actually just £500 then no POA would be required for 2026-27.

And likewise if you'd 2026-27 return showed a huge liability that might require POA for 2027-28 but not 2026-27 as it's the 2025-26 return which determines the need for POA for 2026-27.

kjs31

Dazed_and_C0nfused said:

Although your 2025-26 might only be £500 POA for that tax year are determined by the previous years return.  So you could make a claim to reduce each POA but only to £250 each.  If the liability for 2025-26 was actually just £500 then no POA would be required for 2026-27.

And likewise if you'd 2026-27 return showed a huge liability that might require POA for 2027-28 but not 2026-27 as it's the 2025-26 return which determines the need for POA for 2026-27.

Thanks, that’s helpful. I suspect that I will always owe a chunk of tax from savings as long as interest rates are paying something reasonable. Am I therefore destined to complete a tax return forever? At least I will only be losing 20% of it from 25/26.