Banks/Building Societies NOT reporting to HMRC by the end of June

Nick_C

... but in my case they assumed that an account that paid interest in 22/23 and which was closed in 22/23 will still be paying me interest in 24/25, even though they have not finalised my 23/24 assessment and have not been informed that I received interest on that account in 23/24.  That is simply wrong.

zagfles

boingy said:

I think the system probably works for the vast majority of people. The vast majority of people are not earning more than £1000 in interest and those that do get the tax automatically taken via PAYE if possible. If HMRC make small errors in doing so then, in general, no-one notices especially as tax codes are rounded to the nearest tenner. Of course, here on MSE there is a large concentration of people who earn lots more interest so the system is always going to be tested more by us.

It probably works better than the old system, under which higher rate taxpayers would have to declare and pay extra tax on all interest earned even if just £1. There are probably far more higher rate taxpayers earning over £1 interest than basic rate taxpayers earning more than £1000. 

Plus even MSE'ers with relatively large amounts shouldn't generally be paying tax on interest if they know what they're doing, when there are so many ways to avoid tax like ISAs, premium bonds, low coupon short dated gilts etc. An exception might be those who open loads of regular savers with loss-leading interest rates where even after tax the return might be better than the tax free options. 

masonic

zagfles said:

An exception might be those who open loads of regular savers with loss-leading interest rates where even after tax the return might be better than the tax free options. 

That's the main one that gets me (edit: looking at my current crop, I've bust my PSA from these alone), but also fixed term savers I took out when rates were near their peak. Having fully utilised my ISA allowance for S&S and being a BR taxpayer, my main alternative would have been low coupon gilts, but when I did the comparison it was swings and roundabouts so I kept things simple.

zagfles

masonic said:

zagfles said:

An exception might be those who open loads of regular savers with loss-leading interest rates where even after tax the return might be better than the tax free options. 

That's the main one that gets me (edit: looking at my current crop, I've bust my PSA from these alone), but also fixed term savers I took out when rates were near their peak. Having fully utilised my ISA allowance for S&S and being a BR taxpayer, my main alternative would have been low coupon gilts, but when I did the comparison it was swings and roundabouts so I kept things simple.

I think that's changed a bit. The best buy 3 year fix on MSE is currently 4.62% and 5 year fix is 4.52% so 3.696% and 3.616% after basic rate tax. Short dated low coupon gilts look to be returning the equivalent of around 4% AER after BR tax on the coupons. 

Shylock_249

Dazed_and_C0nfused said:

I haven't read the fine detail of what and how banks and building societies are meant to report but if the bit highlighted in bold is true and the accounts were closed in a previous tax year then it sounds very much like they are reporting information they shouldn't be.

Not sure how you know interest hasn't been reported by Families Building Society?  That could be the case but isn't it possible they have reported it and HMRC haven't acted on it yet?  Maybe they (Families BS) were late reporting the details for 2023-24?

I'm pretty sure banks should report by 30 June.

Regarding your second sentence: I don't think the banks are reporting information they should NOT be, it's just that HMRC are showing accounts which I did have either last year or years before.  This time there were NO estimates which made it easier to understand.  Previous closed accounts showed "Actual" with Zero in the amount column.

When I'd phoned the guy to ask for print outs I asked him what my figure was, when he gave it to me I grabbed my calculator and deducted the figure he had from the figure I know to be true. That figure was exactly the amount of interest I'd received from Families BS.  I pointed out to him that I'd read that banks should report by 30 June and he said that banks were still reporting.  Yes, it is for consideration that Families had reported and it was still waiting in someone it HMRC's in tray but at the time of asking and the time when the printout was made it was NOT included in my figures.

masonic

zagfles said:

masonic said:

zagfles said:

An exception might be those who open loads of regular savers with loss-leading interest rates where even after tax the return might be better than the tax free options. 

That's the main one that gets me (edit: looking at my current crop, I've bust my PSA from these alone), but also fixed term savers I took out when rates were near their peak. Having fully utilised my ISA allowance for S&S and being a BR taxpayer, my main alternative would have been low coupon gilts, but when I did the comparison it was swings and roundabouts so I kept things simple.

I think that's changed a bit. The best buy 3 year fix on MSE is currently 4.62% and 5 year fix is 4.52% so 3.696% and 3.616% after basic rate tax. Short dated low coupon gilts look to be returning the equivalent of around 4% AER after BR tax on the coupons. 

Yes, I'm next due to roll over some cash in May, so if the market looks similar to today I'll probably change tack.