Tax on savings interest above £1000 - do I need to complete a self-assessment?

ANGLICANPAT

Harry 227    'will my building society   contact  HMRC and tell I have an account /interest '      Ive been sorting a  out a  deceased relatives   tax obligations etc and rang HMRC to check if  I still needed to do the  tax return  requested ,  as  the interest I found from his investments  was under the £500 allowance he has .  . I said  to them  " basically he just has £220  interest from NSI index linked bonds "  (Id already noticed he had a tiny interest from NW but didnt mention it  as it made little difference)    They brought up his details  and commented  "  correct and    Nationwide have also reported interest for him  of 24p "      So yes seems its all reported back however tiny .

Miloandme

I wonder if anyone else has had this dilemma. My only income is interest on my savings. That is, no pension, salary, dividends, etc. I am aware of the £18,570 tax free sum (made up of £12570 + £1000 + £5000). My total income is some way below this amount and I know that I do not have to pay tax on my income. What is unclear is whether I need to submit a Self Assessment return to HMRC. I have phoned HMRC for clarification and received a somewhat confusing answer. At first “Yes, you do need to submit a return”, then, after some thought, “No, you don’t need to”. Does anyone have a definitive answer?

Dazed_and_C0nfused

Miloandme said:

I wonder if anyone else has had this dilemma. My only income is interest on my savings. That is, no pension, salary, dividends, etc. I am aware of the £18,570 tax free sum (made up of £12570 + £1000 + £5000). My total income is some way below this amount and I know that I do not have to pay tax on my income. What is unclear is whether I need to submit a Self Assessment return to HMRC. I have phoned HMRC for clarification and received a somewhat confusing answer. At first “Yes, you do need to submit a return”, then, after some thought, “No, you don’t need to”. Does anyone have a definitive answer?

Legally no.

But HMRC guidance would prefer you to file one of interest is £10k or more.

qsk

Dazed_and_C0nfused said:

Miloandme said:

I wonder if anyone else has had this dilemma. My only income is interest on my savings. That is, no pension, salary, dividends, etc. I am aware of the £18,570 tax free sum (made up of £12570 + £1000 + £5000). My total income is some way below this amount and I know that I do not have to pay tax on my income. What is unclear is whether I need to submit a Self Assessment return to HMRC. I have phoned HMRC for clarification and received a somewhat confusing answer. At first “Yes, you do need to submit a return”, then, after some thought, “No, you don’t need to”. Does anyone have a definitive answer?

Legally no.

But HMRC guidance would prefer you to file one of interest is £10k or more.

Are they going to let you know that your interest total is over £10K and you need to file a SA? If not, is there any consequence for not filing? With so many regular savers and higher interest chase, it is difficult to keep track of saving accounts and interests earned for the whole tax year.

eskbanker

Miloandme said:

I wonder if anyone else has had this dilemma. My only income is interest on my savings. That is, no pension, salary, dividends, etc. I am aware of the £18,570 tax free sum (made up of £12570 + £1000 + £5000). My total income is some way below this amount and I know that I do not have to pay tax on my income. What is unclear is whether I need to submit a Self Assessment return to HMRC. I have phoned HMRC for clarification and received a somewhat confusing answer. At first “Yes, you do need to submit a return”, then, after some thought, “No, you don’t need to”. Does anyone have a definitive answer?

What is your savings interest income?

jak22

It says "You need to register for Self Assessment if your income from savings and investments is over £10,000" which seems to be more than guidance or preference, and doesn't refer to whether tax might need to be payable, and they provide a tool to clarify https://www.gov.uk/check-if-you-need-tax-return

Having an online tax account and registering for self assessment seem worth the effort involved, and completion of the self assessment online isn't that time consuming if you've kept totals, and hopefully statements, of the non-ISA interest, dividends, earnings, etc received over the year. It removes doubt, allows payment or refund of tax, and sets a tax code for the next year.

eskbanker

jak22 said:

It says "You need to register for Self Assessment if your income from savings and investments is over £10,000" which seems to be more than guidance or preference, and doesn't refer to whether tax might need to be payable, and they provide a tool to clarify https://www.gov.uk/check-if-you-need-tax-return

It does indeed say that on the HMRC website, but the point being made was that this isn't actually mandated in legislation so is effectively an HMRC preference - for those with >£10K of savings income but confident of no tax liability, by virtue of the relevant allowances, etc, then there isn't any meaningful enforcement action that HMRC could take if the individual chooses not to self-assess.

As you say though, SA isn't as onerous as some perceive it to be....

Bigwheels1111

Miloandme said:

I wonder if anyone else has had this dilemma. My only income is interest on my savings. That is, no pension, salary, dividends, etc. I am aware of the £18,570 tax free sum (made up of £12570 + £1000 + £5000). My total income is some way below this amount and I know that I do not have to pay tax on my income. What is unclear is whether I need to submit a Self Assessment return to HMRC. I have phoned HMRC for clarification and received a somewhat confusing answer. At first “Yes, you do need to submit a return”, then, after some thought, “No, you don’t need to”. Does anyone have a definitive answer?

If under 10K NO.

But here is the way I see it.

If you do not file, I see people on here moaning that they got a large interest payment last year and have been taxed on the same payment this year.

As HMRC just expect its due again.

Even if it was a one off.

Then you have to claim it back again. Get your code adjusted etc.

If you file a self assessment it take about 10/20 mins.

Other than name address and Ni etc there are only one or two boxes that matter.

Income,
Dividends and interest from UK banks and building societies

£ enter the ammount.

You are done.

Registering for self assessment takes longer.

Then you will not get these issues.

I filed mine on the 16/04/24 20 mins later my years work was done.

Also on the phone they don't know what they are doing at times.

Harry227

Angelica123 said:

wmb194 said:

Harry227 said:

WindfallWendy said:

I'm in a similar position keen to avoid paying tax on interest gained by virtue of a big lump sum. I'm going to max out a Premium Bonds account with £50k of it, as any returns on that are tax free, and chances are the return is equivalent to 3-4%

And then every tax year cash in £20k for an ISA, until I'm all out of premium bonds.

But don't buy the Premium bonds until the end of October now, as they won't be eligible for the draw until end of November so you might as well hold onto the funds for another 4 weeks 👍

Yes, that's a great idea (in theory), that I'm seriously considering. The only issue is the absolute pain using/accessing HMRC or NS&I logins, etc. can be.  For example, I've just made an exploration of the registering process for PBs and I've already been told, part way through, that I've been logged out and have to start again because I've pressed the 'back button'. I hadn't. This has happened several times on the safari browser, although a quick google check shows this have been a widely reported problem across browsers ( cue sinking heart at having to deal with a Government agency!). 

There is an NS&I app you can download on the app store onto a mobile phone, but there too the rating is 1.4 stars and the reviews detail a whole history of frustrations recorded by very many users, or those attempting to become users. Still, I'll have a go again tomorrow. 

I've also been trying to top up my NI state pension as I've a couple of years where my contributions weren't made.  Again, that now has to be made over the phone and after several attempts to call and long waits of 20 plus minutes I've just been cut off.  The incompetence of Government agencies is breathtaking.  Hey ho. 

Try using Chrome, I've had no issues.

I would echo this. Used HMRC and NS&I with no problems both on phone and on laptop using Chrome for years with no issues. 

Remember to make sure you are getting the best return (don't focus solely on tax). If you get a 1 year fixed that pays interest at maturity - then interest will fall in next year's tax year. Same with regular savers with products giving interest over 7%. 

Unless you earn over 10k in interest, you don't need to fill in a tax return for interest (although obviously if you are filling it for other reasons then you would need to include it on there). 

"Unless you earn over 10k in interest, you don't need to fill in a tax return for interest".  That's interesting.  How do HMRC determine how much tax you need to pay?  Do building societies and banks inform them that you've earned interest of x amount over the £1000, and they then alter your tax code?  

flaneurs_lobster

Harry227 said:

Angelica123 said:

wmb194 said:

Harry227 said:

WindfallWendy said:

I'm in a similar position keen to avoid paying tax on interest gained by virtue of a big lump sum. I'm going to max out a Premium Bonds account with £50k of it, as any returns on that are tax free, and chances are the return is equivalent to 3-4%

And then every tax year cash in £20k for an ISA, until I'm all out of premium bonds.

But don't buy the Premium bonds until the end of October now, as they won't be eligible for the draw until end of November so you might as well hold onto the funds for another 4 weeks 👍

Yes, that's a great idea (in theory), that I'm seriously considering. The only issue is the absolute pain using/accessing HMRC or NS&I logins, etc. can be.  For example, I've just made an exploration of the registering process for PBs and I've already been told, part way through, that I've been logged out and have to start again because I've pressed the 'back button'. I hadn't. This has happened several times on the safari browser, although a quick google check shows this have been a widely reported problem across browsers ( cue sinking heart at having to deal with a Government agency!). 

There is an NS&I app you can download on the app store onto a mobile phone, but there too the rating is 1.4 stars and the reviews detail a whole history of frustrations recorded by very many users, or those attempting to become users. Still, I'll have a go again tomorrow. 

I've also been trying to top up my NI state pension as I've a couple of years where my contributions weren't made.  Again, that now has to be made over the phone and after several attempts to call and long waits of 20 plus minutes I've just been cut off.  The incompetence of Government agencies is breathtaking.  Hey ho. 

Try using Chrome, I've had no issues.

I would echo this. Used HMRC and NS&I with no problems both on phone and on laptop using Chrome for years with no issues. 

Remember to make sure you are getting the best return (don't focus solely on tax). If you get a 1 year fixed that pays interest at maturity - then interest will fall in next year's tax year. Same with regular savers with products giving interest over 7%. 

Unless you earn over 10k in interest, you don't need to fill in a tax return for interest (although obviously if you are filling it for other reasons then you would need to include it on there). 

"Unless you earn over 10k in interest, you don't need to fill in a tax return for interest".  That's interesting.  How do HMRC determine how much tax you need to pay?  Do building societies and banks inform them that you've earned interest of x amount over the £1000, and they then alter your tax code?  

They report all your earned interest.