Employed & Self Employed - Tax on savings interest

philatio

Just completed my Self Assessment and the tax on my savings interest has got me wondering.

I'm in full-time employment so pay normal basic rate tax through PAYE

I also do a bit of web design work which brings in extra income. Used to be quite a bit but its slowly petering out and this year profit from that is about £2K.

I've always completed self-assessment since I started the web design sideline. Declaring it as self employment.

I now have considerable savings. They all pay Gross Interest so I have declared these on the SA form and I'm being charged interest on this as part of my final calculation. Which is fair enough.

But then that got me thinking. If I didn't have the little self-employment sideline.. and didn't complete self-assessment.. I assume they take the savings interest tax through PAYE? Do the banks report your interest to HMRC?

Because I am employed in my main job and paying PAYE.... is there a danger I'm paying tax on this savings interest twice?  Through PAYE AND Self Asseement ??
Is there any way I can check this ??

Dazed_and_C0nfused

philatio said:

Just completed my Self Assessment and the tax on my savings interest has got me wondering.

I'm in full-time employment so pay normal basic rate tax through PAYE

I also do a bit of web design work which brings in extra income. Used to be quite a bit but its slowly petering out and this year profit from that is about £2K.

I've always completed self-assessment since I started the web design sideline. Declaring it as self employment.

I now have considerable savings. They all pay Gross Interest so I have declared these on the SA form and I'm being charged interest on this as part of my final calculation. Which is fair enough.

But then that got me thinking. If I didn't have the little self-employment sideline.. and didn't complete self-assessment.. I assume they take the savings interest tax through PAYE? Do the banks report your interest to HMRC?

Because I am employed in my main job and paying PAYE.... is there a danger I'm paying tax on this savings interest twice?  Through PAYE AND Self Asseement ??
Is there any way I can check this ??

Yes and no.

If you have paid extra tax under PAYE then that will be reflected on your P60 so when you add your employment details to your tax return you will have more tax credit towards your overall liability.

You are overthinking things a little.

Nomunnofun1

philatio said:

Just completed my Self Assessment and the tax on my savings interest has got me wondering.

I'm in full-time employment so pay normal basic rate tax through PAYE

I also do a bit of web design work which brings in extra income. Used to be quite a bit but its slowly petering out and this year profit from that is about £2K.

I've always completed self-assessment since I started the web design sideline. Declaring it as self employment.

I now have considerable savings. They all pay Gross Interest so I have declared these on the SA form and I'm being charged interest on this as part of my final calculation. Which is fair enough.

But then that got me thinking. If I didn't have the little self-employment sideline.. and didn't complete self-assessment.. I assume they take the savings interest tax through PAYE? Do the banks report your interest to HMRC?

Because I am employed in my main job and paying PAYE.... is there a danger I'm paying tax on this savings interest twice?  Through PAYE AND Self Asseement ??
Is there any way I can check this ??

No - because you are now calculating the tax due on all of your income and deducting tax paid on that income to arrive at a final liability. 

If interest had been included in your PAYE code you would have paid more tax at your employment, granted, and, therefore, a larger deduction from your final liability, 

Total tax due less total tax paid = amount now owed. 

philatio

So if I didn't complete a Self Assessment... I just had the PAYE full time job, with the same amount of savings.. How do HMRC get the tax from the savings interest?

Thats what started my overthinking. 
My actual self employment income is very little now. Most of the tax I owe after completing SA is due to the interest.

I just thought... People not completing SA with the same savings.. are they getting away with not paying tax on them ?

Dazed_and_C0nfused

philatio said:

So if I didn't complete a Self Assessment... I just had the PAYE full time job, with the same amount of savings.. How do HMRC get the tax from the savings interest?

Thats what started my overthinking. 
My actual self employment income is very little now. Most of the tax I owe after completing SA is due to the interest.

I just thought... People not completing SA with the same savings.. are they getting away with not paying tax on them ?

No, they either have to pay it direct or via their tax code.

uknick

My partner currently has 2 sources of income; taxable savings interest income and non taxable non PAYE income.  A year or so ago HMRC finally got the bank feeds with her taxable interest and wrote telling her 2 things.  First, they changed her tax code to take into an amount for estimated untaxed interest and second, she now has to do a self assessment.

As she isn't on any PAYE system, she will pay the tax she owes direct to HMRC after completing the SA.
  

Dazed_and_C0nfused

uknick said:

My partner currently has 2 sources of income; taxable savings interest income and non taxable non PAYE income.  A year or so ago HMRC finally got the bank feeds with her taxable interest and wrote telling her 2 things.  First, they changed her tax code to take into an amount for estimated untaxed interest and second, she now has to do a self assessment.

As she isn't on any PAYE system, she will pay the tax she owes direct to HMRC after completing the SA.
  

What tax code does she have if she has no PAYE income 🤔

uknick

She used to have the usual 1257, now reduced.

I've never thought of her non savings income as being PAYE as it is a non taxable medically retired benefit.  However, it does get paid through the same system that pays my pension so I suppose it is through a PAYE system.