Tax on interest over £1000

Mariscalian

I have power of attorney over the financial affairs of my mother who has dementia. Last year I put her savings into an account earning interest with the result that she earned well over £1000 in interest. Thinking that I would have to file a tax return for her, I called HMRC to ask how I should do this, but they referred me to the questionnaire on their website which only asks “Did you receive over £10,000 in interest?” To which, if the answer is no, the response is “You do not have to file a tax return.”  Can someone explain to me how this makes sense? How will HMRC recoup the tax owed if someone doesn’t inform them of exactly how much has been earned?

JGB1955

The bank/building society will report the interest to HMRC and your mothers tax code for 2025/6 will be adjusted to recover the tax due.

molerat

Is £1K relevant though ?  Is the rest of her income in excess of £17570 ?

Mariscalian

Yes, her pensions amount to more than that amount.

Mariscalian

I thought that banks no longer report to HMRC about interest earned.

uknick

Mariscalian said:

I thought that banks no longer report to HMRC about interest earned.

Yep, still do.  My partner just got a notice to file self assessment as a result of what the banks told HMRC last year.

Mariscalian

Ok well thanks for explaining this for me. Glad that I don’t have to fill out a tax return, anyway. 😅

Albermarle

Mariscalian said:

Ok well thanks for explaining this for me. Glad that I don’t have to fill out a tax return, anyway. 😅

You will get a 'simple assessment' calculation from HMRC around the end of Summer 2024 ( for the tax year 23/24) This should show ( from what you say ) that some tax will be payable on the interest above £1000.
You can pay this, or more normally they will adjust her tax code for the following tax year to collect it.

Dazed_and_C0nfused

Albermarle said:

Mariscalian said:

Ok well thanks for explaining this for me. Glad that I don’t have to fill out a tax return, anyway. 😅

You will get a 'simple assessment' calculation from HMRC around the end of Summer 2024 ( for the tax year 23/24) This should show ( from what you say ) that some tax will be payable on the interest above £1000.
You can pay this, or more normally they will adjust her tax code for the following tax year to collect it.

I suspect that is unlikely in this scenario.

The op has said his mother gets > £17,570 in (presumably taxable) pension income so is paying some tax already and if the amount owed isn't too much it will often be a P800 calculation that is issued rather than a Simple Assessment.

The op could still pay this direct if they wished but if they don't it would just be collected via the 2025-26 tax code.