On track to exceed my PSA - should I move my money?

JonSalji

Had a flurry of regular savers and fixed accounts maturing over the past few months. I have kept rough record of these and think I may exceed the £1000 PSA limit, but not much. Maybe £80 or so. 

I have two more accounts that are accumulating interest, one of these is a fixed deposit so nothing I can’t do about it. The other is my NatWest regular saver that I am putting £150 in each month. 

I don’t know what is best in this situation. To keep under the cap I will have to move all the money in my NatWest to stop further accumulation of interest, but of course I can’t replace it back. 

The other thing is just to let it do its thing and pay the taxes. I don’t mind this but just not sure how it will impact my take home salary after tax code adjustments and how long it takes to “return to normal”, so to speak. 

Grateful for any advice!

El_Torro

What interest are you making with NatWest? If you moved to a Cash ISA what interest would you make there? Do you even have allowance left to pay into a Cash ISA?

£80 extra of interest means about £16 worth of tax. Not a lot to worry about, though I can understand not wanting to go through the faff of declaring it to HMRC. 

Ultimately you should be maximising the amount of net interest you make. If paying tax on some interest puts you in a better position than using tax free savings (Cash ISAs and Premium Bonds) then paying tax is the best way to go.

Dazed_and_C0nfused

Surely best net return is the default option.

If having interest taxed at 20% instead of 0% is definitely the only consideration then it's fairly simple to know which route gives you most money.

And don't forget for a lot of people the extra tax owed for 2024-25 won't be paid in full until the end of March 2027.

eskbanker

If you'll only exceed the PSA by £80, that would suggest a tax liability of £16, or £32 if you're a higher rate taxpayer, which would be collected by (minor) tax code adjustment in 2026/27, although you could choose to pay it off before then if you preferred - how much interest would you lose by shifting money to suboptimal accounts?

InvesterJones

El_Torro said:

£80 extra of interest means about £16 worth of tax. Not a lot to worry about, though I can understand not wanting to go through the faff of declaring it to HMRC. 

No need to declare it if on PAYE which OP implies they are.

OP, it'll be an extremely small impact to your take home - delayed, yes, but you can also update your income/interest on the web portal in subsequent years if you're worried about them assuming it'll be over by a similar amount the next year - but they'll adjust automatically anyway and you won't lose out in the end.

wiseonesomeofthetime

Personally, grab your extra interest. Next October-ish (I am still waiting for this year's) HMRC will update your online tax record with details of any tax owed for 24-25 tax year.

To avoid it affecting your tax code, pay the sum (if accurate) to balance your books, else it will affect your next two tax codes as they will make presumptions of tax you may earn the following year too.

Tax code changes don't come into effect until the following April, so in your case April 2026.

JonSalji

Thanks everyone for your input. Very helpful. 

My NatWest is giving me 6.17% AER and the option is to move all of it into my ISA giving 4.70%. 

On balance, as I won’t be able to move money back into NatWest and that’s my current highest paying account with almost £4K in it, I think I’ll just pay the tax and keep it there especially slim pickings with higher interest saving accounts now. 

To be clear, I should be able to log on to my HMRC account around October 25 to see what tax I have to pay, and if I do so, it won’t affect my tax code from April 26? 

wiseonesomeofthetime

In my experience, yes.

Don't think anyone else's would be any different tbh.

eskbanker

JonSalji said:

To be clear, I should be able to log on to my HMRC account around October 25 to see what tax I have to pay, and if I do so, it won’t affect my tax code from April 26? 

Yes, you can decline the offer of an interest-free loan from HMRC if you wish to do so!

Dazed_and_C0nfused

eskbanker said:

JonSalji said:

To be clear, I should be able to log on to my HMRC account around October 25 to see what tax I have to pay, and if I do so, it won’t affect my tax code from April 26? 

Yes, you can decline the offer of an interest-free loan from HMRC if you wish to do so!

Can you remain a MSE user if you decline that option though 😳

JonSalji

eskbanker said:

JonSalji said:

To be clear, I should be able to log on to my HMRC account around October 25 to see what tax I have to pay, and if I do so, it won’t affect my tax code from April 26? 

Yes, you can decline the offer of an interest-free loan from HMRC if you wish to do so!

Haha I presume this means I can choose to not pay and have it come out of my PAYE in 2026…. I hate owing anything so will definitely pay off asap!