Self-Assesment for Savings Interest over £10k

j_netprofit

Tax on interest is absolute b******t!

subjecttocontract

Um.....what has benefit got to do with tax on savings ?

Kim_13

eskbanker said:

Kim_13 said:

subjecttocontract said:

You can employ an accountant to handle it for you.

That would cost more than the £106 the OP breached the £10k by.

But OP's tax liability on the £10K interest is nearly £4K, so the fact that the excess over the £10K is £106 isn't really relevant.

Agree on your other point though....

The OP now has a ridiculous amount of hassle for the sake of £106 (and if they ultimately feel that they have to employ an accountant because the guidance just isn't there in a user friendly way, they'd be left with less than if they'd just earned the £10,000 and not a penny more.) In general it's best to maximise your return and pay the tax (given the net return has often beaten an ISA), but where someone isn't going to exceed 10K by much, it seems it would be better to go out of your way not to go over the tax return threshold and save yourself the hassle/expense (because someone who's never had to deal with SA before is going to end up with one of them given the lack of clarity.)

@Martico I took the post to mean that the OP had been keeping an eye on their savings interest (username is SavvySaver after all) to keep it below 10K, but that the forgotten joint interest had pushed them over.

friolento

The OP doesn't just owe tax on £106 but a substantial amount, probably over £3k. Tax debts of that size are not collected through changes to the tax code but through the processes they have in place for Self Assessment.

Filling in a Self Assessment when your only taxable income is from employment and savings interest is really not a ridiculous amount of hassle. You wait until you have got your P60 and until you know the exact taxable interest from your savings. It then takes 20 minutes to fill in the SA. 

Kim_13

friolento said:

The OP doesn't just owe tax on £106 but a substantial amount, probably over £3k. Tax debts of that size are not collected through changes to the tax code but through the processes they have in place for Self Assessment.

Filling in a Self Assessment when your only taxable income is from employment and savings interest is really not a ridiculous amount of hassle. You wait until you have got your P60 and until you know the exact taxable interest from your savings. It then takes 20 minutes to fill in the SA. 

It seems it's going to take longer to get registered correctly than to fill it in and that is the hassle.

SavvySaver24

Martico said:

Kim_13 said:

subjecttocontract said:

You can employ an accountant to handle it for you.

That would cost more than the £106 the OP breached the £10k by.

Are we sure that the OP has actually breached the limit, if they were initially including interest earned under the protection of the ISA tax wrapper?

Yes I'm £106 over BEFORE factoring the ISA.

boingy

Why don't you just wait for HMRC to write to you? They'll tell you if they need an SA from you. It's possible the amounts reported by your banks will not tally with your calculation so you might squeeze inside the 10K line, although HMRC may ask you to do an SA anyway. But the process is that banks report the interest paid to HMRC  and HMRC react to that and let you know what you need to do or give you a new tax code. It will take months for the banks to report and for HMRC to process the info but it will happen. Just be patient.

In the meantime, make sure you set aside about 4K to cover the worst case bill (and get some of those savings into tax free places - Pension, ISA, Premium Bonds!)

Albermarle

jay_ftw said:

Tax on interest is absolute b******t!

It is commonplace in most countries, and the UK has more allowances than most . If you lived in Ireland for example, you would be very jealous of how much interest we can earn tax free in the UK.

SavvySaver24

boingy said:

Why don't you just wait for HMRC to write to you? They'll tell you if they need an SA from you. It's possible the amounts reported by your banks will not tally with your calculation so you might squeeze inside the 10K line, although HMRC may ask you to do an SA anyway. But the process is that banks report the interest paid to HMRC  and HMRC react to that and let you know what you need to do or give you a new tax code. It will take months for the banks to report and for HMRC to process the info but it will happen. Just be patient.

In the meantime, make sure you set aside about 4K to cover the worst case bill (and get some of those savings into tax free places - Pension, ISA, Premium Bonds!)

I just like to be ahead of the game really. If I have to fill one in regardless I'd rather I could just get it out the way ASAP (I know exactly what interest I've earnt so not worried about the calculations being wrong).

I've already used mine and my partner's allowance for the year so couldn't shove any more over annoyingly. If I'd not forgotten about the joint accounts I'd have moved money into a lower interest account to avoid this to be honest!

boingy

SavvySaver24 said:

I know exactly what interest I've earnt so not worried about the calculations being wrong.

It's not a case of being wrong. It's a case of banks being inconsistent with when and how they report interest. 

You'd have to drag me kicking and screaming back into self-assessment. I'll do it if/when necessary and not before. The problem is that HMRC assume you'll earn a similar amount next year and in subsequent years so you'll end up wasting time on SA forms even if you owe no further tax. It took years for me to persuade them I no longer needed to SA.