Self-Assesment for Savings Interest over £10k

Dazed_and_C0nfused

spider42 said:

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.

This ^^^

The legislation and what HMRC would like people to do are two different things.

zagfles

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!)

And once you've used all those, get low coupon gilts. There's no tax on capital gains from gilts. It's barking to pay 40% tax on a large amount of interest when you could get around 4%pa tax free capital gain using short dated gilts plus a tiny amount of taxable interest. 

Qyburn

SavvySaver24 said:

Is it better to wait for them to get in touch or get ahead of the game? 

My general rule, if I think I'm due a refund I do my return as soon as possible. If I think I'll need to pay then I'll submit it near the deadline.

Don't forget you can fill it all in and see the calculation without submitting, so you can see how much you need to set aside to pay them in January.

Dazed_and_C0nfused

Qyburn said:

SavvySaver24 said:

Is it better to wait for them to get in touch or get ahead of the game? 

My general rule, if I think I'm due a refund I do my return as soon as possible. If I think I'll need to pay then I'll submit it near the deadline.

Don't forget you can fill it all in and see the calculation without submitting, so you can see how much you need to set aside to pay them in January.

I think the question was more around should you register for Self Assessment or wait for HMRC to realise and send a return.

JGB1955

Qyburn said:

SavvySaver24 said:

Is it better to wait for them to get in touch or get ahead of the game? 

My general rule, if I think I'm due a refund I do my return as soon as possible. If I think I'll need to pay then I'll submit it near the deadline.

Don't forget you can fill it all in and see the calculation without submitting, so you can see how much you need to set aside to pay them in January.

Even if you submit your return today (which I did) you still won't have to pay the first instalment until 31 January.  Having said that, I had forgotten that I would also have to make a payment on account for 2024/5 on 31 Jan 2025.  Forewarned is forearmed!  £2,100 due, rather than the £1,400 anticipated.

necronom

"In the meantime, make sure you set aside..."

Oh, I didn't expect that!  At the moment for me it's just taken out of my PAYE, so they already have the money, don't they?  They get it every month when I'm paid.  They keep changing my tax code all the time to take more.
So if I have to pay a load in January, will they refund me what they took?  I'm confused about all this.
I can't believe how much trouble all this is going to cause loads of people.

subjecttocontract

necronom said:

"In the meantime, make sure you set aside..."

Oh, I didn't expect that!  At the moment for me it's just taken out of my PAYE, so they already have the money, don't they?  They get it every month when I'm paid.  They keep changing my tax code all the time to take more.
So if I have to pay a load in January, will they refund me what they took?  I'm confused about all this.
I can't believe how much trouble all this is going to cause loads of people.

No. HMRC won't know how much interest you have been paid yet because the tax year has only just ended and banks won't have provided that info to HMRC.

necronom

But from now until they find out, I'll have the tax code I currently have, so if they find out in June I'll have overpaid for 3 months.  Then if I do a tax return in October, do they reset my tax code then to a much lower value (as I then don't pay any tax through PAYE), then I pay what's left manually?

Dazed_and_C0nfused

necronom said:

But from now until they find out, I'll have the tax code I currently have, so if they find out in June I'll have overpaid for 3 months.  Then if I do a tax return in October, do they reset my tax code then to a much lower value (as I then don't pay any tax through PAYE), then I pay what's left manually?

What happens between now and June is of no relevance to the tax owed for 2023-24.

Your 2023-24 tax code is also irrelevant now.  If you paid extra tax because of your 2023-24 tax code including an entry for untaxed interest then that will be reflected on your P60 and you will get credit for it, either on your Self Assessment return or the tax calculation (P800 or PA302) HMRC will issue later this summer.

If you file a tax return any revision to your 2024-25 tax code will be highly likely to be determined by how you answer a question near the end of your return (about keeping your tax code up to date using the information from your return).

subjecttocontract

It should all even out over time.
Most of us keep records, so we know our tax liability and can check what we have paid is correct.
You could do the same if you don't feel you can trust HMRC to get it right. I've always been able to confirm my numbers tally with theirs.