1257L for 2024 versus tax on interest on savings

n3ophyte

eskbanker said:

n3ophyte said:

Are we given the option to make a lump sum tax payment in the autumn rather than suffer a tax code adjustment?

Yes, you're entitled to decline HMRC's offer of an interest-free loan....

Thanks. But the punitive tax code adjustment sticks around for more than a year doesn’t it? HMRC assume you will earn similar amounts in interest in subsequent years which actually won’t be the case with interest rates dropping.

subjecttocontract

Falling interest rates are not guaranteed.
War in the Middle East or escalation in Ukraine e.g. may trigger another recession.

eskbanker

n3ophyte said:

eskbanker said:

n3ophyte said:

Are we given the option to make a lump sum tax payment in the autumn rather than suffer a tax code adjustment?

Yes, you're entitled to decline HMRC's offer of an interest-free loan....

Thanks. But the punitive tax code adjustment sticks around for more than a year doesn’t it? HMRC assume you will earn similar amounts in interest in subsequent years which actually won’t be the case with interest rates dropping.

That's conflating two different issues - if HMRC estimate that your income from savings income will result in a tax liability then they can still adjust your PAYE tax coding for the current tax year regardless of whether or not that's the method used to collect underpaid tax for a previous year.

n3ophyte

eskbanker said:

n3ophyte said:

eskbanker said:

n3ophyte said:

Are we given the option to make a lump sum tax payment in the autumn rather than suffer a tax code adjustment?

Yes, you're entitled to decline HMRC's offer of an interest-free loan....

Thanks. But the punitive tax code adjustment sticks around for more than a year doesn’t it? HMRC assume you will earn similar amounts in interest in subsequent years which actually won’t be the case with interest rates dropping.

That's conflating two different issues - if HMRC estimate that your income from savings income will result in a tax liability then they can still adjust your PAYE tax coding for the current tax year regardless of whether or not that's the method used to collect underpaid tax for a previous year.

Ah I hadn’t appreciated that. Thanks for taking the time to explain the situation.