interest on savings

Nick_C

General comment on the issue of interest on savings, and the hassle of dealing with HMRC.

I make sure that I keep my taxable interest on savings below £1k.

Despite this, HMRC changed my tax code for the current year based on the false assumption that my interest will be £1356 this year.  That in turn was based on a false assumption that my interest last year was £1263.

I have spent two and a half hours on the phone (much of it on hold) and spoken to 5 different people before finally getting my tax code corrected.  In one call, HMRC asked me about 30 different account relating to 2023/24.  20 of the accounts had been closed or earned no interest last year.  It took me hours to check these accounts.

HMRC assume that an account that paid interest one year will also pay it the following year.  Even if the account has been closed.

This probably won't affect most people, but they reviewed my tax code because I had a couple of temporary jobs earlier this year which they wrongly assumed would continue, and predicted my income for this year would push me into the 40% tax bracket.  I wish!

AmityNeon

All the regular savers I closed early in the 22/23 tax year, HMRC assumed all the accounts were still open and estimated the same amount of interest from those accounts for 23/24 (despite the banks obviously NOT reporting those accounts), and then adjusted my tax code (yesterday) to collect extra tax based on those false estimates.

Here I was thinking that by October 2024, HMRC would adjust based only on what was actually reported by the banks for 23/24 (and use that as a basis for estimation for 24/25), but instead, they also included estimates based on accounts from 22/23 that were not reported in 23/24, which is ludicrous, as it suggests we never close savings accounts.

Bigwheels1111

Nick_C said:

General comment on the issue of interest on savings, and the hassle of dealing with HMRC.

I make sure that I keep my taxable interest on savings below £1k.

Despite this, HMRC changed my tax code for the current year based on the false assumption that my interest will be £1356 this year.  That in turn was based on a false assumption that my interest last year was £1263.

I have spent two and a half hours on the phone (much of it on hold) and spoken to 5 different people before finally getting my tax code corrected.  In one call, HMRC asked me about 30 different account relating to 2023/24.  20 of the accounts had been closed or earned no interest last year.  It took me hours to check these accounts.

HMRC assume that an account that paid interest one year will also pay it the following year.  Even if the account has been closed.

This probably won't affect most people, but they reviewed my tax code because I had a couple of temporary jobs earlier this year which they wrongly assumed would continue, and predicted my income for this year would push me into the 40% tax bracket.  I wish!

To make it easy next year just file a self assessment return, takes 20 mins.

I had to as went over 10k, but would save you hours on the phone.

Nick_C

If I have a problem next year, I will put in a Subject Access Request and a formal complaint. 

I don't want to complete a self assessment form every year, and I shouldn't have to. 

HMRC should assess me based on the facts.  They shouldn't be making making up figures.

They are entitled to make assumptions for this year based on my income for last year, but at this stage they have not assessed my income for last year, or collected all the data they need to do so. 

dont_use_vistaprint

Easiest thing with HMRC is to file a return, it’s simple and quick and you get the money by BACS very fast 

kempiejon

dont_use_vistaprint said:

Easiest thing with HMRC is to file a return, it’s simple and quick and you get the money by BACS very fast 

Don't know about the easiest thing. I noted my tax code had been adjusted this year by an amount that exactly matched for a tax liability I had from about 3 or 4  years ago. I had no extra tax to pay so my code didn't need this historic adjustment. I used the web chat and got the erroneous adjustment instantly removed. No forms to fill, no return to file, just get past the automatic assistant and a 5 minute wait for an advisor, the adjustment was made in real time.

2010

I wonder if it might be better for people that don`t want to fill in S/A form to send a letter about Aug. time each year stating your own estimate of the previous tax year`s interest.

I know you shouldn`t have to but with multiple accounts, both still open and some closed, it might save a lot of hassle.