Help, please - never been in this situation before.

Petula

Last year my partner received a lump sum when his mother died, and put that into two savings accounts with good interest.  Just now it has hit me that we will have to pay tax on the interest from these accounts - there is over £1000 interest.  I am absolutely like a rabbit stuck in the headlights!  I am the main one that deals with our finances.  He is on a basic tax rate (believe that’s what it’s called).

We have never ‘had money’, or at least not enough to worry about.  He collects his wages, we pay our bills, put a bit into savings, end of.  This knowledge that he will be, or should be now, paying for the interest has really upset me.  I don’t want any nasty letters saying he owes such and such, we’ve never had any issues with late payments of any kind let alone the gov!

Is there any website or booklet that would walk me through what we have to do - how and when?  Once I can get this straightened out in my mind, I will look into what other options there are for these funds but I simply cannot get my head around it just now.  I do see the “ISAs & tax free savings” board at the top of this page and that will be my first stop after I’ve been able to sort the tax owing bit 😩

Thank you so much for any help, I honestly just don’t know what to do next and am getting myself wound up. I apologise if this should have been in a different thread.

Mark_d

https://www.gov.uk/check-if-you-need-tax-return

bioboybill

You don't have to do anything. Your bank or building society will inform HMRC of any interest you earned. If it takes you over the limit they will change your tax code in the following tax year to claim back the tax if any is due. If it's a joint account you would have a limit of £1000 each, or if one of you has a low paid job then you may have an addition starter rate of zero if it is in the name of that one of you. There is nothing to worry about. You won't be getting any nasty letters.

twadds123

A little more information will be needed before too much help can be given.

Whose name are the savings account under?

Is that person employed and roughly what do they earn?

Assuming fairly standard things, that the named person is in employment and earning above the personal income tax threshold then all that will happen is that in a future year the tax code of that person will be altered so that the tax man can claim back the tax owed on the interest.

More complicated if self employed or already doing tax self assessment etc.

eskbanker

Petula said:

This knowledge that he will be, or should be now, paying for the interest has really upset me.  I don’t want any nasty letters saying he owes such and such, we’ve never had any issues with late payments of any kind let alone the gov!

Best thing would be to calm down and not to stress about this!  If he owes any tax for 2023/24, HMRC will contact him later this year to tell him of this, and he'll probably have the option to have it collected via tax code adjustment for 2025/26, but there's no need for him or you to do anything for now, so nobody is in any trouble....

Petula

bioboybill said:

 There is nothing to worry about.

Best news I've had for ages.  Thank you!twadds123 said:

A little more information will be needed before too much help can be given.

Whose name are the savings account under?

Is that person employed and roughly what do they earn?

Assuming fairly standard things, that the named person is in employment and earning above the personal income tax threshold then all that will happen is that in a future year the tax code of that person will be altered so that the tax man can claim back the tax owed on the interest.

More complicated if self employed or already doing tax self assessment etc.

Savings accounts are in my partners name.  He is employed @ £21k +/- per year after taxes.  Not self-employed and has never done self assessment.

Petula

Thank you everyone for your input and calming influences 😁  I'll give myself a day or two to revel in the "We're not in trouble" bubble, then get to work on sorting better ways of saving.  Thanks again!

Dazed_and_C0nfused

Petula said:

bioboybill said:

 There is nothing to worry about.

Best news I've had for ages.  Thank you!twadds123 said:

A little more information will be needed before too much help can be given.

Whose name are the savings account under?

Is that person employed and roughly what do they earn?

Assuming fairly standard things, that the named person is in employment and earning above the personal income tax threshold then all that will happen is that in a future year the tax code of that person will be altered so that the tax man can claim back the tax owed on the interest.

More complicated if self employed or already doing tax self assessment etc.

Savings accounts are in my partners name.  He is employed @ £21k +/- per year after taxes.  Not self-employed and has never done self assessment.

If he owes less than £1,800 in tax it's highly likely HMRC will include this tax owed in next years tax code (for 2025-26) and he will pay it equally across the year by extra PAYE tax each payday.

If the tax owed is more than that he might need to file a tax return because it suggests the interest is more than £10k.

But if it's less than £10k then HMRC do everything really, he just needs to check they have included the correct interest in his tax calculation.

mattywallace121

Get it in a CHIP cash ISA ASAP.

LHW99

You always have the option of using cash ISA's - you can put in up to £20,000 per year, per person, and interest is tax-free

Albermarle

Last year my partner received a lump sum when his mother died, and put that into two savings accounts with good interest.  Just now it has hit me that we will have to pay tax on the interest from these accounts - there is over £1000 interest.  I am absolutely like a rabbit stuck in the headlights!  I am the main one that deals with our finances.  He is on a basic tax rate (believe that’s what it’s called).

Just think it is better to have money saved earning interest and have to maybe pay a bit of tax on it, than not having the money + interest in the first place.

Paying a bit of extra tax is a small issue, whilst having no savings is a big issue.