Non coded income

aroominyork

Slightly sensitive one, this. I manage all my and my wife's investment and tax affairs (self-assessment etc.). She has build up some private savings over the years but does not like to talk about them, so I cannot ask the interest she is earning to enter it on her tax return. She recently retired from work so I was tonight checking on Gateway whether her tax code seemed correct for her State and NHS pensions. Gateway shows both these pensions and also "non coded income" of £1,322. I could not figure out what that was so I filled in a Gateway page to "tell us about other income" and entered £0 as non coded income. The moment I received an email acknowledgement frm HMRC I twigged that this might be undeclared bank income.  So... 1) would bank interest show as "non coded income", and 2) what should I now do? (I'd prefer the answer is not "ask your wife" because she is very sensitive about this issue.)

Dazed_and_C0nfused

1.  Yes, if it has been included on a Self Assessment return it could be.

2.  Nothing.  AIUI that is just used to help calculate tapered Personal Allowance, HICBC or Married Couple's Allowance so for most people it doesn't actually make any difference to their tax code.

aroominyork

1. But it was not included on SA because I complete her SA and don't have a figure to enter. I do however enter some bank interest from other cash I invest for her.
2. But haven't I potentially tonight made a false statement that I need to correct?

Dazed_and_C0nfused

aroominyork said:

1. But it was not included on SA because I complete her SA and don't have a figure to enter. I do however enter some bank interest from other cash I invest for her.
2. But haven't I potentially tonight made a false statement that I need to correct?

1.  So she's happy to let you submit incorrect returns and risk the change of a HMRC investigation 🤔

2.  Where would you declare "non coded" income on a tax return?  You wouldn't so not sure what false statement has been made? 

aroominyork

Dazed_and_C0nfused said:

aroominyork said:

1. But it was not included on SA because I complete her SA and don't have a figure to enter. I do however enter some bank interest from other cash I invest for her.
2. But haven't I potentially tonight made a false statement that I need to correct?

1.  So she's happy to let you submit incorrect returns and risk the change of a HMRC investigation 🤔

2.  Where would you declare "non coded" income on a tax return?  You wouldn't so not sure what false statement has been made? 

1. You explain that to her. I'm registered with HMRC as allowed to manage her account - she set it up and gives me all the info I need, with that one exception.
2. It's on Gateway's income summary that non coded income is itemised. Obviously on SA I would show bank interest in the right box. 

Back to "what should I do?". Can I withdraw the query, or just enter another "correction" putting back the £1,322 figure?

Dazed_and_C0nfused

aroominyork said:

Dazed_and_C0nfused said:

aroominyork said:

1. But it was not included on SA because I complete her SA and don't have a figure to enter. I do however enter some bank interest from other cash I invest for her.
2. But haven't I potentially tonight made a false statement that I need to correct?

1.  So she's happy to let you submit incorrect returns and risk the change of a HMRC investigation 🤔

2.  Where would you declare "non coded" income on a tax return?  You wouldn't so not sure what false statement has been made? 

1. You explain that to her. I'm registered with HMRC as allowed to manage her account - she set it up and gives me all the info I need, with that one exception.
2. It's on Gateway's income summary that non coded income is itemised. Obviously on SA I would show bank interest in the right box. 

Does she want her current tax code to be adjusted to start collecting some tax due on interest ahead of when it has to be paid?

aroominyork

Dazed_and_C0nfused said:

aroominyork said:

Dazed_and_C0nfused said:

aroominyork said:

1. But it was not included on SA because I complete her SA and don't have a figure to enter. I do however enter some bank interest from other cash I invest for her.
2. But haven't I potentially tonight made a false statement that I need to correct?

1.  So she's happy to let you submit incorrect returns and risk the change of a HMRC investigation 🤔

2.  Where would you declare "non coded" income on a tax return?  You wouldn't so not sure what false statement has been made? 

1. You explain that to her. I'm registered with HMRC as allowed to manage her account - she set it up and gives me all the info I need, with that one exception.
2. It's on Gateway's income summary that non coded income is itemised. Obviously on SA I would show bank interest in the right box. 

Does she want her current tax code to be adjusted to start collecting some tax due on interest ahead of when it has to be paid?

Ah, that's very helpful. You're pointing out it is an estimate so it can be reduced to zero and then pay tax on the actual amount of income in her 2024-25 tax return*. So where did that figure of £1,322 come from? Her 2023-24 tax return shows untaxed UK interest of £963 and UK dividend income of £359. Add them together and you get £1,322. So am I right in thinking this is not a problem after all?

* and assume the savings institutions will inform HMRC of any interest not detailed on her tax return.

zagfles

aroominyork said:

Dazed_and_C0nfused said:

aroominyork said:

1. But it was not included on SA because I complete her SA and don't have a figure to enter. I do however enter some bank interest from other cash I invest for her.
2. But haven't I potentially tonight made a false statement that I need to correct?

1.  So she's happy to let you submit incorrect returns and risk the change of a HMRC investigation 🤔

2.  Where would you declare "non coded" income on a tax return?  You wouldn't so not sure what false statement has been made? 

1. You explain that to her. I'm registered with HMRC as allowed to manage her account - she set it up and gives me all the info I need, with that one exception.
2. It's on Gateway's income summary that non coded income is itemised. Obviously on SA I would show bank interest in the right box. 

Back to "what should I do?". Can I withdraw the query, or just enter another "correction" putting back the £1,322 figure?

You submit tax returns for her knowing it's incorrect? You realise that's a criminal offence? 

The answer is simple. Either she gives you all the information required to complete a truthful tax return, or she does her own tax return. 

Bookworm105

at the end of the day she and she alone is legally responsible for her tax return 
you are acting as her agent and no legal liability for what you put down 

if you knowingly submit a tax return with estimated / unknown figures on it and tick the box "are estimated figures used?" then the problem is hers if she fails to correct the actual return

the tax code is simply a cashflow mechanism to allow HMRC to collect money during the year. Its accuracy is largely irrelevant provided the taxpayer does not care about over or under paying on a monthly basis. What matters is the tax return so yes 1322 is untaxed a band and divi and therefore is down to her to declare accurately on her next tax return.  If she refuses to give you the info to allow that to happen then that is her risk, which it appears she does not care about 

aroominyork

Bookworm105 said:

at the end of the day she and she alone is legally responsible for her tax return 
you are acting as her agent and no legal liability for what you put down 

if you knowingly submit a tax return with estimated / unknown figures on it and tick the box "are estimated figures used?" then the problem is hers if she fails to correct the actual return

the tax code is simply a cashflow mechanism to allow HMRC to collect money during the year. Its accuracy is largely irrelevant provided the taxpayer does not care about over or under paying on a monthly basis. What matters is the tax return so yes 1322 is untaxed a band and divi and therefore is down to her to declare accurately on her next tax return.  If she refuses to give you the info to allow that to happen then that is her risk, which it appears she does not care about 

I hadn't noticed that box - thanks for pointing it out.

This whole issue wasn't really relevant when interest rates were low - it didn't really bother me whether I had the right figures so long as she was not avoiding tax that was due. Now that PSA will no longer cover her income I will do all I can to get it correct.

zagfles

aroominyork said:

Bookworm105 said:

at the end of the day she and she alone is legally responsible for her tax return 
you are acting as her agent and no legal liability for what you put down 

if you knowingly submit a tax return with estimated / unknown figures on it and tick the box "are estimated figures used?" then the problem is hers if she fails to correct the actual return

the tax code is simply a cashflow mechanism to allow HMRC to collect money during the year. Its accuracy is largely irrelevant provided the taxpayer does not care about over or under paying on a monthly basis. What matters is the tax return so yes 1322 is untaxed a band and divi and therefore is down to her to declare accurately on her next tax return.  If she refuses to give you the info to allow that to happen then that is her risk, which it appears she does not care about 

I hadn't noticed that box - thanks for pointing it out.

This whole issue wasn't really relevant when interest rates were low - it didn't really bother me whether I had the right figures so long as she was not avoiding tax that was due. Now that PSA will no longer cover her income I will do all I can to get it correct.

Why do people think it's OK to provide incorrect figures if it makes no difference to tax? The tax return/calculation can be used as evidence for stuff like tax credits, student finance and probably lots of other stuff where taxable interest even within the PSA does affect the calculation. 

The declaration states "I declare that the information I’ve given on this tax return and any supplementary pages is correct and complete to the best of my knowledge and belief. I understand that I may have to pay financial penalties and face prosecution if I give false information."