Interest on Savings Account - The Tax Year Interest is Recognised As Being Received

TojoRalph

Dazed_and_C0nfused said:

TojoRalph said:

slinger2 said:

For those of us who don't do self assessment, it seems simplest to just accept what HMRC says (I'm still waiting for a 2023/24 number from them).

I do not currently need to do Self Assessment, I am just trying to get my house in order and make sure I have this information available. My current and forecast future sole source of income is interest on savings account, however it is somewhat below the £17570 limit before tax. I am therefore wondering if I should draw down the difference from a pension, hence getting house in order. The thing stopping me doing that is that I don't need it. With regards to accepting what HMRC says, is that information readily available from HMRC? Whilst I appreciate that the HMRC will have the details of the total of interest paid to an individual as reported to them by the financial institutions, I was not aware that it could be accessed or requested? Thanks.

If they don't need to issue a P800 or PA302 calculation then you won't get anything with the details on.

If you want a breakdown at individual account level you just need to ask for it.  Although it's a bit early I suspect for 2023-24 given institutions had until 30 June to send the details to HMRC in the first place.

There is no P800 or PA302 required, so that rules that out. All I was looking for really was the total interest reported so that I could compare that with the records I have put together for 2023-24. But it's a long way from being important. 🙂

Ocelot

EthicsGradient said:

nottsphil said:

Bobziz said:

400ixl said:

It is the tax year the interest is allocated to you by the provider. You may not necessarily be able to access it at that point, but it has been assigned to your account.

In your example the provider has allocated and you can access it so it is taxable in this financial year.

First paragraph is not quite right, key point is accessibility not whether it's been credited to your account or not. 

How can you access interest that has not been credited, or did you mean by it being paid away instead?

Other way round - some accounts credit interest inside an account, but you can't access it. HMRC says if you can't access it, then the tax is not yet due on it. Unfortunately, HMRC also makes providers tell them about all the interest that has been credited, whether or not it's accessible (and with no way for the provider to say it's not accessible, at least in the last format that I saw of what they can tell HMRC). This means HMRC then does not always follow its own rules when assessing the tax for PAYE taxpayers. 

It certainly doesn't!

MoneySavingsPensions

I am so confused even after HMRC sending me a link to an 'internal manual' on taxation of interest !. My query is regarding when interest is reportable on a fixed rate product if it is paid annually, but I chose to add it back to the original investment and I cannot now access it until maturity which falls into a different tax year. 

wmb194

MoneySavingsPensions said:

I am so confused even after HMRC sending me a link to an 'internal manual' on taxation of interest !. My query is regarding when interest is reportable on a fixed rate product if it is paid annually, but I chose to add it back to the original investment and I cannot now access it until maturity which falls into a different tax year. 

If it’s inaccessible then it’ll be at the end of the term.

The problem is that the banks and BS’ will usually report the interest annually to HMRC and HMRC will assume this means it’s accessible and therefore taxable.

In another thread someone said they have to phone HMRC every year to tell it that this isn’t the case.

newatc

I've come to the inclusion that it depends on how your savings provider reports it to HMRC because that's what HMRC goes by. Trying to change that seems a horrendous task so now I just ask the provider how they are going to report it. Might not be correct but certainly easier.

EthicsGradient

newatc said:

I've come to the inclusion that it depends on how your savings provider reports it to HMRC because that's what HMRC goes by. Trying to change that seems a horrendous task so now I just ask the provider how they are going to report it. Might not be correct but certainly easier.

The first time I asked SmartSave when they reported interest, their answer was "we don't report interest". When I replied that would be illegal and they'd be facing big fines, they then replied, without acknowledgement they'd been talking out of their behind, that they report annually, even for accounts when interest is not available until maturity (which I can understand, because HMRC tells them to, despite HMRC guidance in public being that it's not taxable until maturity).

What I'm saying is that an answer from a savings provider doesn't necessarily represent the truth; just what the person designated to reply thinks is the truth. How you work out if that person has a clue is hard to know.

masonic

Avoiding accounts that credit inaccessible interest is a way to sidestep this whole issue.