Self-Assesment for Savings Interest over £10k

Albermarle

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 would be in this 'sit on your hands ' camp as well.

Especially with all the grey area about when interest on multi year fixed rates are reported to HMRC.

friolento

boingy said:

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. 

If the HMRC assumption for next year are wrong, just change them in your Personal Tax Account. Takes but a minute to do.

huw01

I still haven't had a tax code amendment from 2022/2023 where I have earned more than £1000 in interest. It is not a big amount I earned around £1,600 in interest in that tax year but my calculations they have about £136 to claim back from me in tax.

2023/2024 will be nearer £6,000 earned in interest and about £1,000 for them to claim back. 2024/2025 due to the raise in interest rates I will go over the 10k.

It will be a huge task for HMRC to get on top of all of this, it was in one respect easier when they paid the interest to us in net

boingy

friolento said:

boingy said:

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. 

If the HMRC assumption for next year are wrong, just change them in your Personal Tax Account. Takes but a minute to do.

You're correct, but they'll still ask you to do the SA.

Kim_13

huw01 said:

I still haven't had a tax code amendment from 2022/2023 where I have earned more than £1000 in interest. It is not a big amount I earned around £1,600 in interest in that tax year but my calculations they have about £136 to claim back from me in tax.

2023/2024 will be nearer £6,000 earned in interest and about £1,000 for them to claim back. 2024/2025 due to the raise in interest rates I will go over the 10k.

It will be a huge task for HMRC to get on top of all of this, it was in one respect easier when they paid the interest to us in net

There have been a few cases on here of people earning over 10K in interest but having no other income, so it would be good for HMRC and UK tax residents if those who breached the 10K but had no tax to pay on the interest (as £18,570 would be tax free in that scenario) were removed from the SA requirement. As the OP points out, they have all the information, so the SA only speeds up collection of the tax owed and (presumably) sorts out what tax has already been collected through the tax code to ensure that interest isn’t double taxed.

Beddie

HMRC needs to remove this £10k interest tax return requirement - it's just admin for the sake of it.

subjecttocontract

I agree. Suggest you drop a line to Jeremy Hunt care of 11 Downing Street. The problem is he's likely to loose his job and his seat in a matter of months and won't have time to make any changes. You could try writing to Rachel Reeves but I suspect shes got other stuff to busy herself with so not much chance of any action there either.

26left

Albermarle said:

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 would be in this 'sit on your hands ' camp as well.

Especially with all the grey area about when interest on multi year fixed rates are reported to HMRC.

The rules are quite clear - if you earn more than £10,000 from savings and investments you must register for self assessment and complete a tax return.

https://www.gov.uk/check-if-you-need-tax-return

spider42

26left said:

Albermarle said:

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 would be in this 'sit on your hands ' camp as well.

Especially with all the grey area about when interest on multi year fixed rates are reported to HMRC.

The rules are quite clear - if you earn more than £10,000 from savings and investments you must register for self assessment and complete a tax return.

https://www.gov.uk/check-if-you-need-tax-return

Except those aren't "the rules" at all. That is just an HMRC "wishlist" of people who they would like to be in Self Assessment. There is no legislation that requires ANYBODY to "register for Self Assessment", no matter what circumstances apply to them. 

The legal obligations on a taxpayer are:

a) To notify HMRC if they have a tax liability which isn't being collected at source, e.g. via PAYE (Section 7 Taxes Management Act 1970), and 
b) Complete a Self Assessment return if HMRC have sent you an explicit notice telling you to complete a Self Assessment return (Section 8 Taxes Management Act 1970).

If you have no tax liability, and HMRC haven't sent you a notice requiring completion of a tax return, then you are under no obligation to do anything at all, despite what the HMRC website will inaccurately tell you.

Kim_13

26left said:

Albermarle said:

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 would be in this 'sit on your hands ' camp as well.

Especially with all the grey area about when interest on multi year fixed rates are reported to HMRC.

The rules are quite clear - if you earn more than £10,000 from savings and investments you must register for self assessment and complete a tax return.

https://www.gov.uk/check-if-you-need-tax-return

But if banks are inconsistent as to when they report interest as having been earned to HMRC (multi year fixes as mentioned) then there will be some taxpayers who cannot be 100% sure as to whether they have earned more than £10,000 from savings and investments or not until they receive the relevant documentation from their providers. Where that is the case, it makes sense to only take action when either a) They have that information and are over the threshold or b) HMRC write and tell them that they must complete a return.