Self Assessment: Savings Interest Statements for closed accounts.

slinger2

Swipe said:

slinger2 said:

Does anyone know who reports to the HMRC for the "one-stop shops" like Raisin. It is Raisin or the banks they use?

Don't quote me on it, but I'm sure I've read here that those accounts under a third party holding such as Raisin never get reported to HMRC.

It's just that I got £3.76 interest through Raisin before I abandoned it, which I'm planning to declare. I guess that HMRC won't be too fussed. 75p going to pay off a bit of national debt.

dosh37

Dazed_and_C0nfused said:

dosh37 said:

eskbanker said:

dosh37 said:

eskbanker said:

dosh37 said:

Years ago savings organisations would send a complete statement through the post at the end of the tax year. I believe The Coventry BS still does this.

Up to 2016, there was an obligation to provide tax certificates but that was because the institutions were deducting tax from the interest.

dosh37 said:

How are we expected to complete a Self Assessement Tax Return if we are unable to obtain the necessary information?

You're expected to keep records yourself.

If you fail to do so then you are dependent on contacting the institutions or working out interest yourself from bank statements for money to/from savings accounts.

When an account is closed, the amount transferred into your bank shows the final amount. It does not show separate figures for interest. It gets more complicated if some of the interest applies to an earlier tax year i.e. the interest was left in the account to be compounded rather than being withdrawn. Unless it's something like a fixed term bond over more than one year, tax is payable when interest becomes available to be be withdrawn, not when you decide to draw it.

If you have dozens of accounts, many of which have been closed, then contacting every savings organisation would take days or weeks and leave you a jibbering wreck. Have you ever tried to get through to one of these organisations by phone? After listening to recorded messages telling you that you can do everything online followed by the inevitable 'our phone lines are unusually busy, blah blah' then 20 minutes listening to 'music?' most people give up.

Well, exactly, you're making my point for me!  You're responsible for keeping your own records of all taxable income, and, if you fail to do so, then the price to pay for such carelessness is the laborious and time-consuming process of trying to get hold of (or calculate) information that you chose not to access easily when you had the opportunity.  Anyone able and willing to operate "dozens of accounts" should obviously be capable of tracking them, including interest earned....

In my view, it should be up to HMRC to tell us what we owe.

They should not expect us to tell them what we 'think' we owe and then fine us if we get it wrong.

They already have the required information from the savings organisations.

The existing system makes no sense to me at all.

It's the equivalent of an energy company requiring a customer to tell them how much energy we 'think' we have used instead of sending out a bill, even though they already know the answer through their meters. The meters are the equivalent of interest notification provided by saving organisations directly to HMRC.

Where would a fine come into the equation 🤔

If you complete a tax return then the onus is on you to complete it accurately.

Where would a fine come into the equation 🤔?

Well, according to:-

https://www.gov.uk/guidance/bank-and-building-society-interest-returns

It states: "There is also a penalty of up to £3,000 for an incorrect return"

dosh37

Swipe said:

That's why I don't close down old accounts until I've done my SA.

The problem with that is that interest is usually only added after 1 year (unless interest is added monthly or the account is closed early). You can end up with many zombie accounts containg just a small holding amount (eg. £1). You can't complete the SA until all interest has been added to all accounts, which could take up to 1 year. During that time you are unable make use of the accrued interest by reinvesting it. Some savings accounts reduce their interest rate if the balance falls below a threshold.

dosh37

poseidon1 said:

masonic said:

dosh37 said:

jak22 said:

Ideally each bank would generate a certificate of interest for all accounts that have been opened in the year, either shortly after April 5 or on account closure. Many do, but not all, and some need for them to be requested - this should surely be a regulation like needing to quote an AER or the ISA rules. 

It's also worth keeping the monthly statements, but it's not uncommon for these to be unavailable for closed accounts. If possible download a statement just before closing, but this likely won't include any closing interest.

When it's a mobile app only bank it is slightly trickier to transfer PDF statements into storage.

The best way is to keep a spreadsheet of monthly interest received to provide the total figure for the tax year - the other documents are then just supporting evidence.

And what happens if you have a computer failure / disk crash?

My preference would be for all savings organisations to provide an annual statement through the post that includes all transactions, including interest payments, for all accounts, both open and closed at the end of each tax year. This is what The Coventry BS does. It saves a lot of time and effort and guards againts accounting errors.

A paper document puts you in a more vulnerable position than a sensibly backed up electronic document. What if you have a fire or get flooded? Or more likely, the document gets lost in the post, intercepted, or misplaced after being delivered?

My preference is not to have any documents sent to me through the post.

I am with you with regard to going paperless. A number of years back my area was hit with a spate of mail being stolen  by temporary postmen with theives using bank/credit card statements, and other personal data to perpetrate identity fraud. 

As a result I switched off all paper based financial and utility statements, and am now virtually paperless in this regard.

To deal with my self assessment returns, I download year end interest certificates for all savings accounts as they arise ( 8 for 2023/24) , save on my hard drive of the laptop in a dedicated folder, and periodically backup the drive on an external drive for good measure. 

 Thus far all the saving institutions I utilise ( past and present)  provide certificates and when switching to better rates,  i avoid being locked out of accounts by retaining small outstanding balances. It's not rocket science.

Many savings organisations send security and password information through the post when an account is first opened even if you do opt to go paperless. I would have thought that kind of information is a lot more sensitive than an interest statement for Self Assessment.

eskbanker

dosh37 said:

Where would a fine come into the equation 🤔?

Well, according to:-

https://www.gov.uk/guidance/bank-and-building-society-interest-returns

It states: "There is also a penalty of up to £3,000 for an incorrect return"

As per its title, that document informs banks and building societies of their responsibilities to submit returns to HMRC (and the consequences of failure to do so accurately) so is nothing to do with the tax returns completed by individual taxpayers....

Qyburn

dosh37 said:

Swipe said:

That's why I don't close down old accounts until I've done my SA.

The problem with that is that interest is usually only added after 1 year (unless interest is added monthly or the account is closed early). You can end up with many zombie accounts containg just a small holding amount (eg. £1). You can't complete the SA until all interest has been added to all accounts, which could take up to 1 year. During that time you are unable make use of the accrued interest by reinvesting it. Some savings accounts reduce their interest rate if the balance falls below a threshold.

You only declare interest paid during the tax year. The yet to be added interest in those zombie accounts goes into next year's return.

poseidon1

dosh37 said:

poseidon1 said:

masonic said:

dosh37 said:

jak22 said:

Ideally each bank would generate a certificate of interest for all accounts that have been opened in the year, either shortly after April 5 or on account closure. Many do, but not all, and some need for them to be requested - this should surely be a regulation like needing to quote an AER or the ISA rules. 

It's also worth keeping the monthly statements, but it's not uncommon for these to be unavailable for closed accounts. If possible download a statement just before closing, but this likely won't include any closing interest.

When it's a mobile app only bank it is slightly trickier to transfer PDF statements into storage.

The best way is to keep a spreadsheet of monthly interest received to provide the total figure for the tax year - the other documents are then just supporting evidence.

And what happens if you have a computer failure / disk crash?

My preference would be for all savings organisations to provide an annual statement through the post that includes all transactions, including interest payments, for all accounts, both open and closed at the end of each tax year. This is what The Coventry BS does. It saves a lot of time and effort and guards againts accounting errors.

A paper document puts you in a more vulnerable position than a sensibly backed up electronic document. What if you have a fire or get flooded? Or more likely, the document gets lost in the post, intercepted, or misplaced after being delivered?

My preference is not to have any documents sent to me through the post.

I am with you with regard to going paperless. A number of years back my area was hit with a spate of mail being stolen  by temporary postmen with theives using bank/credit card statements, and other personal data to perpetrate identity fraud. 

As a result I switched off all paper based financial and utility statements, and am now virtually paperless in this regard.

To deal with my self assessment returns, I download year end interest certificates for all savings accounts as they arise ( 8 for 2023/24) , save on my hard drive of the laptop in a dedicated folder, and periodically backup the drive on an external drive for good measure. 

 Thus far all the saving institutions I utilise ( past and present)  provide certificates and when switching to better rates,  i avoid being locked out of accounts by retaining small outstanding balances. It's not rocket science.

Many savings organisations send security and password information through the post when an account is first opened even if you do opt to go paperless. I would have thought that kind of information is a lot more sensitive than an interest statement for Self Assessment.

None of my newer online only accounts have done this ( so far ) as for my other accounts these were established 6 to 9 years ago  ( Charter Savings, Kent Reliance, Marcus etc) so new saving products with them are under long established security protocols.

What i would have liked is for renewed credit/debit cards be available to pick up at bank branches rather than sent in the post. Failing that, maybe all the banks could follow the lead of Chase Bank whose debit card has no account number, sixteen digit code or cvc security ( all these stored within the biometric accessed app).

ian1246

Question on the Higher Tax Threshold & interest payments: I m currently a basic rate Tax payer but likely due to get a payrise in September, which coupled with my £2500ish annual overtime will take me over the higher rate Tax threshold - dropping my interest allowance from £1000 to £500.

My question is how is that calculated? I.e. atm I don't need to worry about interest payments since its about £35 every month & then I have a 7% regular saver due to mature in January 2025 (£300 a month going into it) - however next year that will take me over £500 annual interest.

Do you simply add up all your interest in the Tax year (April 2024-March 2025) & then declare it (if over the threshold) for April 2025 & if your now in the higher tax threshold & therefore limited to £500 allowance - tough - regardless of spending half the Tax year as a basic rate taxpayer? - or does the fact you'll have spent only part of the Tax year as a higher rate Tax payer &  thereby have different interest allowances for different parts of the tax year, affect the annual interest threshold you'll be entitled to?

Hope that makes sense!

Edit: Also where do we stand with cashback paid by banks (I.e. 1% spending back on a chase debit card or Santanders 1% cashback on direct debits etc...) - does that count towards your interest allowance?

ColdIron

Tax is calculated on your total earnings and interest in the financial year, April 6th to April 5th, not March, it isn't done in bits. Most people don't need to report it, your employer and the banks will report to HMRC who usually adjust your tax code if required

Cashback is not usually taxable, it's regarded as a discount

gt94sss2

ian1246 said:

Question on the Higher Tax Threshold & interest payments: I m currently a basic rate Tax payer but likely due to get a payrise in September, which coupled with my £2500ish annual overtime will take me over the higher rate Tax threshold - dropping my interest allowance from £1000 to £500.

Do you simply add up all your interest in the Tax year (April 2024-March 2025) & then declare it (if over the threshold) for April 2025 & if your now in the higher tax threshold & therefore limited to £500 allowance - tough - regardless of spending half the Tax year as a basic rate taxpayer?

Edit: Also where do we stand with cashback paid by banks (I.e. 1% spending back on a chase debit card or Santanders 1% cashback on direct debits etc...) - does that count towards your interest allowance?

The personal interest allowance is based on your total salary in the tax year. If you are a higher rate taxpayer, it will be £500 for that tax year (or "tough" as you call it) 

Unless you need to complete a tax return, there is nothing you need to do. The banks will tell HMRC how much interest you have earned and they are most likely to amend your tax code (do check their figures though) to collect any tax due.

If you don't make use of your tax free ISA allowance you may wish to do so

Cashback via things like Chase and Santander does not count towards your allowance or even your taxable income.