Paying Tax on Savings Account Interest

philstephen

Most of what I need to know is on  this MSE page -https://www.moneysavingexpert.com/savings/personal-savings-allowance/ I'm one of those that in the 2025/26 tax year will fall into the category that will have to pay 20% interest on some savings accounts. The page mentions "Your bank or building society will pay all savings interest due to you gross (without tax taken off the amount). Yet it'll likely report the amount it's paid to you in interest to HM Revenue & Customs each tax year." 

It's the "likely" bit that a bank / building society will report it that confuses me a bit. How do I actually know that's happening? I don't get to see the amount of taxable interest on my HMRC online personal tax account. One instant access account pays out interest monthly. Or do banks etc. only tell HMRC once per year? 

I keep back all statements and log the amount of interest as it appears on accounts I have immediate access. It's just knowing if HMRC see that each and every time. 

born_again

You know it's happened when you get a letter from the tax man with the amount you are due to pay.

Daughter got one in 2023, 2 option pay it all in one go, or pay via altered tax code.
Told here last option is better as in effect you are getting a interest free loan & made sure that she then got ISA to minimise tax liability going forward.

eskbanker

philstephen said:

It's the "likely" bit that a bank / building society will report it that confuses me a bit. How do I actually know that's happening? I don't get to see the amount of taxable interest on my HMRC online personal tax account. One instant access account pays out interest monthly. Or do banks etc. only tell HMRC once per year? 

The banks and building societies make annual submissions to HMRC, theoretically by the end of June, but it takes another few months before HMRC process that data into a state where they can advise you of any tax liability.

Codger1947

Although you can get sent this info, you need to specify the account numbers and this is not possible if, like me, you delete accounts upon maturity.  I asked at my local bank branch whether it would be possible to supply depositors with details of interest received each financial year.  The clerk said they knew this would become a problem years ago when interest started to be paid gross.  IMO it should be very straightforward to make this available on the home banking screen either as a document or a CSV file.

eskbanker

Codger1947 said:

Although you can get sent this info, you need to specify the account numbers and this is not possible if, like me, you delete accounts upon maturity.  I asked at my local bank branch whether it would be possible to supply depositors with details of interest received each financial year.  The clerk said they knew this would become a problem years ago when interest started to be paid gross.  IMO it should be very straightforward to make this available on the home banking screen either as a document or a CSV file.

It's true that institutions paying interest had to issue annual tax vouchers when making deductions pre-2016, but many will still provide annual certificates of interest anyway.  If you save with institutions that don't provide these then there is effectively an obligation on the saver to ensure that all relevant information has been secured before choosing to close accounts, but it should still be possible to obtain it afterwards by submitting a subject access request to the institution(s) concerned or even ultimately HMRC.

Codger1947

eskbanker said:

It's true that institutions paying interest had to issue annual tax vouchers when making deductions pre-2016, but many will still provide annual certificates of interest anyway.  If you save with institutions that don't provide these then there is effectively an obligation on the saver to ensure that all relevant information has been secured before choosing to close accounts, but it should still be possible to obtain it afterwards by submitting a subject access request to the institution(s) concerned or even ultimately HMRC.

What a palaver!  Surely providing this information on the customer's home banking webpage once a year must be as easy as chips?

eskbanker

Codger1947 said:

eskbanker said:

It's true that institutions paying interest had to issue annual tax vouchers when making deductions pre-2016, but many will still provide annual certificates of interest anyway.  If you save with institutions that don't provide these then there is effectively an obligation on the saver to ensure that all relevant information has been secured before choosing to close accounts, but it should still be possible to obtain it afterwards by submitting a subject access request to the institution(s) concerned or even ultimately HMRC.

What a palaver!  Surely providing this information on the customer's home banking webpage once a year must be as easy as chips?

I doubt it - online banking homepages are generally geared up to show a list of accounts held by the customer, rather than to display periodic historical data.  However, most will have some form of secure messaging and/or statement/document archive though, so you might find the information there anyway.

And, as above, it's hardly a palaver to take a note (e.g. statement download, screenshot, or whatever) of interest paid before closing an account!

Yorkie1

eskbanker said:

And, as above, it's hardly a palaver to take a note (e.g. statement download, screenshot, or whatever) of interest paid before closing an account!

The challenge can be when you take a screenshot etc. of a statement before closure, but you then don't see the final interest that is added as the account is closed - because that final interest isn't there when you look, and when you look afterwards there's no statement as the account has been closed!

It would require noting the balance just before closure, then noting how much is received by the nominated destination account at closure.

Not impossible but a bit more fiddly.

eskbanker

Yorkie1 said:

eskbanker said:

And, as above, it's hardly a palaver to take a note (e.g. statement download, screenshot, or whatever) of interest paid before closing an account!

The challenge can be when you take a screenshot etc. of a statement before closure, but you then don't see the final interest that is added as the account is closed - because that final interest isn't there when you look, and when you look afterwards there's no statement as the account has been closed!

It would require noting the balance just before closure, then noting how much is received by the nominated destination account at closure.

Not impossible but a bit more fiddly.

Yes, agreed, but that generally applies to accounts closed automatically on maturity by the institution, whereas the above poster was talking about making a conscious choice to 'delete' them....