Confusion over tax on savings

noitsnotme

vikkimcd said:

I know someone has said above that the banks tell HMRC re: tax on interest, but I have been told by my bank that they do not, plus the fixed term savings account I had told me that I need to declare interest myself. How do I inform HMRC of any tax owed (if over the £18XXX), and when do I do this for the interest earned for 2023/24?

As previously said, banks don't pay tax on interest on your behalf anymore, so they don’t tell HMRC anything about tax.

But they do tell HMRC how much interest you earn.

vikkimcd

My bank said they did not do this, that may be incorrect. However, the firm that I earned interest with from a one year fixed term account last year sent me a form that stated they would not declare any tax on my behalf, and that it was up to me to do so.

xylophone

Are you saying that you receive over £10,000 a year in interest from non - isa  accounts?

If so, see

https://www.gov.uk/apply-tax-free-interest-on-savings

You need to register for Self Assessment if your income from savings and investments is over £10,000. Check if you need to send a tax return if you’re not sure.

Barkin

vikkimcd said:

My bank said they did not do this, that may be incorrect. However, the firm that I earned interest with from a one year fixed term account last year sent me a form that stated they would not declare any tax on my behalf, and that it was up to me to do so.

Which is correct. Usually they'll inform HMRC of any interest earned.
They can't know how much tax is due, because they don't know your situation, and won't know about any potentially taxable interest accrued elsewhere.

HMRC look at your overall situation - relevant earnings etc - and total interest accrued, and calculate any tax owed from the overall picture.

noitsnotme

vikkimcd said:

My bank said they did not do this, that may be incorrect. However, the firm that I earned interest with from a one year fixed term account last year sent me a form that stated they would not declare any tax on my behalf, and that it was up to me to do so.

I think you’re still getting confused between tax and total interest earned.

Banks have nothing to do with tax on interest anymore.  But they are still supposed to tell HMRC the total amount of interest you have earned with them.

I think you are still talking to your bank about tax and they are correct when they say won’t declare tax on your behalf.  If they said they don’t tell HMRC about the interest you have earned they’re probably wrong.  But I think it’s you that is getting confused.

Which bank are telling you this?

vikkimcd

Here is an example of one of the institutions I was considering for the rest of the savings, which shows the account holder as having to inform HMRC.

eskbanker

vikkimcd said:

Here is an example of one of the institutions I was considering for the rest of the savings, which shows the account holder as having to inform HMRC.

It doesn't say that at all!

It says that the account holder pays the tax (if applicable), but only as a result of Atom having informed HMRC of how much interest they'd paid out, which will generally result in HMRC collecting the tax due, rather than the account holder having to declare it (unless they self-assess)....

noitsnotme

vikkimcd said:

Here is an example of one of the institutions I was considering for the rest of the savings, which shows the account holder as having to inform HMRC.

As I said, you’re still confused between tax on interest and total interest earned.  They are two different things.

vikkimcd

Okay then, can someone explain in simple words instead of having a go all the time please?? Just saying I don't understand is not exactly helpful

xylophone

The financial institution reports the total interest earned on your non ISA accounts.

The interest is paid without deduction of tax.

Whether or not you will pay tax on your interest  depends on your personal situation.

https://www.gov.uk/apply-tax-free-interest-on-savings