Over Saving Interest maximum

Col2018

Hello

I've been saving for a house and just realised that I have gone over the £1000 tax free saving amount which I can earn before I pay tax on interest earned, on my  savings. (I'm a standard rate tax payer)

FYI I found this was happening when my national insurance number changed and  a larger amount was charged for income tax on my monthly wage. 

Please can someone confirm how I calculate the amount I should be taxed on the amount I'm over the £1000 limit,  do I pay more back as interest so I should pay this owed amount in full, also how long this tax collection will continue for.

Also if the wrong amount is deducted from me to pay this tax back how do I claim a refund and stop these payments occuring if/when the right amount is paid back?

Many thanks
C

slinger2

Col2018 said:

Hello

I've been saving for a house and just realised that I have gone over the £1000 tax free saving amount which I can earn before I pay tax on interest earned, on my  savings. (I'm a standard rate tax payer)

FYI I found this was happening when my national insurance number changed and  a larger amount was charged for income tax on my monthly wage. 

Please can someone confirm how I calculate the amount I should be taxed on the amount I'm over the £1000 limit,  do I pay more back as interest so I should pay this owed amount in full, also how long this tax collection will continue for.

Also if the wrong amount is deducted from me to pay this tax back how do I claim a refund and stop these payments occuring if/when the right amount is paid back?

Many thanks
C

I'm confused why your national insurance number has changed. I've had the same one for 50+ years.

eskbanker

If there is any underpaid tax to be recovered via PAYE then HMRC will generally write to you explaining this adjustment to your tax code, what changes have been applied and in which tax years have they stated that there's a savings-related liability?

DRS1

slinger2 said:

Col2018 said:

Hello

I've been saving for a house and just realised that I have gone over the £1000 tax free saving amount which I can earn before I pay tax on interest earned, on my  savings. (I'm a standard rate tax payer)

FYI I found this was happening when my national insurance number changed and  a larger amount was charged for income tax on my monthly wage. 

Please can someone confirm how I calculate the amount I should be taxed on the amount I'm over the £1000 limit,  do I pay more back as interest so I should pay this owed amount in full, also how long this tax collection will continue for.

Also if the wrong amount is deducted from me to pay this tax back how do I claim a refund and stop these payments occuring if/when the right amount is paid back?

Many thanks
C

I'm confused why your national insurance number has changed. I've had the same one for 50+ years.

Me too.  I bet he means tax code.

Newbie_John

Do a self assessment and the end of the year to get that sorted.
£1000 interests is free (unless your salary is £49k then it will take you to 40% range..)
You can put £20k to ISA to avoid that problem, this year, another £20k in April.

But you'll pay tax just on the excess above £1000. So £1500 interests - you pay 20% tax on £500 resulting in £100 = you still £1400 better off.

eskbanker

Newbie_John said:

Do a self assessment and the end of the year to get that sorted.

No!  There's nothing that OP's said that suggests self-assessment being needed - it's required if interest exceeds £10K not £1K, so in the latter case it should all sort itself out without any intervention being needed from the taxpayer....

Albermarle

Newbie_John said:

Do a self assessment and the end of the year to get that sorted.
£1000 interests is free (unless your salary is £49k then it will take you to 40% range..)
You can put £20k to ISA to avoid that problem, this year, another £20k in April.

But you'll pay tax just on the excess above £1000. So £1500 interests - you pay 20% tax on £500 resulting in £100 = you still £1400 better off.

You should not do a SA unless you need to. It will just cause confusion and the system may even prevent you doing one. 
Check if you need to send a Self Assessment tax return - GOV.UK

OliverLacon

eskbanker said:

Newbie_John said:

Do a self assessment and the end of the year to get that sorted.

No!  There's nothing that OP's said that suggests self-assessment being needed - it's required if interest exceeds £10K not £1K, so in the latter case it should all sort itself out without any intervention being needed from the taxpayer....

If the interest is between £1000 and £10000, how will it sort itself out? Surely the OP needs to inform HMRC?

surreysaver

OliverLacon said:

eskbanker said:

Newbie_John said:

Do a self assessment and the end of the year to get that sorted.

No!  There's nothing that OP's said that suggests self-assessment being needed - it's required if interest exceeds £10K not £1K, so in the latter case it should all sort itself out without any intervention being needed from the taxpayer....

If the interest is between £1000 and £10000, how will it sort itself out? Surely the OP needs to inform HMRC?

No. The financial institutions inform HMRC.

eskbanker

OliverLacon said:

eskbanker said:

Newbie_John said:

Do a self assessment and the end of the year to get that sorted.

No!  There's nothing that OP's said that suggests self-assessment being needed - it's required if interest exceeds £10K not £1K, so in the latter case it should all sort itself out without any intervention being needed from the taxpayer....

If the interest is between £1000 and £10000, how will it sort itself out? Surely the OP needs to inform HMRC?

No - the institutions paying the interest will notify HMRC a few months after the end of the tax year, and then once HMRC have gathered and processed all that data, they'll determine if there's any tax due and if so, collect it, usually via PAYE code adjustment for a later year.  They'll issue a P800 assessment document clarifying this, hence my asking OP what that says....

Col2018

Hello all

Many thanks for the comments. I apologise my national insurance number has stayed the same, I should have said that my tax code has changed. I apoligise for that mistake.