Paying Tax on Interest

thevoid69

Hi, last year I would have earned more than £1000 in interest on my savings. 

I'm a bit worried as I'm not sure if I need to do something to pay this? I am in full time employment, so will HMRC at some point just change my tax code to reflect I earn more than £1000 a year in interest?

Thanks

wmb194

thevoid69 said:

Hi, last year I would have earned more than £1000 in interest on my savings. 

I'm a bit worried as I'm not sure if I need to do something to pay this? I am in full time employment, so will HMRC at some point just change my tax code to reflect I earn more than £1000 a year in interest?

Thanks

Chase will report the interest to HMRC and if you do nothing your tax code will be altered. It can take a few tax years for everything to wash through so don’t expect quick movement from HMRC.

thevoid69

wmb194 said:

thevoid69 said:

Hi, last year I would have earned more than £1000 in interest on my savings. 

I'm a bit worried as I'm not sure if I need to do something to pay this? I am in full time employment, so will HMRC at some point just change my tax code to reflect I earn more than £1000 a year in interest?

Thanks

Chase will report the interest to HMRC and if you do nothing your tax code will be altered. It can take a few tax years for everything to wash through so don’t expect quick movement from HMRC.

Does that means I'll suddenly be hit with a huge bill, or massive chunks taken out of my salary each month? I probably earned about £2200 in interest in the past 12 months

slinger2

Depends on your personal situation. But if you're a 20% tax payer you'll get a £1k allowance and pay 20% tax on the other £1,200 = £240. You will probably be able to pay that as lump sum or they'll adjust your tax code if you don't pay it.

thevoid69

slinger2 said:

Depends on your personal situation. But if you're a 20% tax payer you'll get a £1k allowance and pay 20% tax on the other £1,200 = £240. You will probably be able to pay that as lump sum or they'll adjust your tax code if you don't pay it.

I don't even know where to start in order to make sure everything is up to date with HMRC. I don't want them to turn round in a few years and say I've avoided tax or start taking high amounts from my salary each month!

kempiejon

thevoid69 said:

slinger2 said:

Depends on your personal situation. But if you're a 20% tax payer you'll get a £1k allowance and pay 20% tax on the other £1,200 = £240. You will probably be able to pay that as lump sum or they'll adjust your tax code if you don't pay it.

I don't even know where to start in order to make sure everything is up to date with HMRC. I don't want them to turn round in a few years and say I've avoided tax or start taking high amounts from my salary each month!

Have you used your full ISA allowance, in the future if you fill ISAs each year and you're saving over £20k each year and your desire is not to pay tax try premium bonds. You can check your tax code at anytime online  https://www.access.service.gov.uk/login/signin/creds

thevoid69

I'm only using an easy access savings account

thevoid69

HMRC say on their website - 

If you do not receive a letter by 31 March 2025, you must contact HMRC as soon as possible to avoid a penalty.

gravel_2

thevoid69 said:

HMRC say on their website - 

If you do not receive a letter by 31 March 2025, you must contact HMRC as soon as possible to avoid a penalty.

In relation to what?

You are in a flap about nothing.

All interest is supposed to be reported to HMRC by the banks. They collate this information and recover any owed tax by way of tax code adjustment later down the line. You do not have to do anything.

Only at £10,000 interest in a year do you have self assessment obligations.

thevoid69

gravel_2 said:

thevoid69 said:

HMRC say on their website - 

If you do not receive a letter by 31 March 2025, you must contact HMRC as soon as possible to avoid a penalty.

In relation to what?

You are in a flap about nothing.

All interest is supposed to be reported to HMRC by the banks. They collate this information and recover any owed tax by way of tax code adjustment later down the line. You do not have to do anything.

Only at £10,000 interest in a year do you have self assessment obligations.

This is what I'm asking. So if I currently own HMRC £250 roughly for interest earned last year, they would want to recover that, so how would they?

kempiejon

thevoid69 said:

This is what I'm asking. So if I currently own HMRC £250 roughly for interest earned last year, they would want to recover that, so how would they?

Usually they'll adjust your code. You can check your tax code at anytime with HMRC websites