Over Saving Interest maximum

ThePirates

I'm not with Nationwide but did switch my bank account in 2024 and got a switch bonus amount of  over £100 so is this also reported to HMRC as account interest? 

Nope, never known that to happen.

Yes it does!

Kim_13

Nationwide report the Fairer Share Payment as interest, but I’m not aware of them doing the same with any switching bonus.

HMRC can only charge interest on any late payment - as they are requesting your employer deduct £X, payment cannot be late. You are settling the amount due in accordance with their process (as Self Assessment is not required unless interest is £10,000) as it becomes known and due. This year you owe them money, but due to falling interest rates they may owe you next year (having assumed that you will earn the same interest again.)

Sarahspangles

There are other threads in MSE which say that the bonus paid when you ‘Refer a Friend’ is taxable, but not the switch incentive itself.

Col2018

Hello. Sorry for not providing any further updates I've not been well. 

Looking on the HMRC website it says -

We've changed your tax code. you now get Untaxed interest on savings and investments worth £743.

Is this why my wage tax code and personal allowance has changed? Does it mean i'll get taxed extra to repay £743 which I guess was the amount I earned on savings interest over the £1000 allowance in 2024/2025? 

Also I'm  unlikely to earn over the £1000 personal allowance in the 2025/26 tax year so will my tax code change to adjust to this or will I need to claim money back at the end of this year? 

Dazed_and_C0nfused

Col2018 said:

Hello. Sorry for not providing any further updates I've not been well. 

Looking on the HMRC website it says -

We've changed your tax code. you now get Untaxed interest on savings and investments worth £743.

Is this why my wage tax code and personal allowance has changed? Does it mean i'll get taxed extra to repay £743 which I guess was the amount I earned on savings interest over the £1000 allowance in 2024/2025? 

Also I'm  unlikely to earn over the £1000 personal allowance in the 2025/26 tax year so will my tax code change to adjust to this or will I need to claim money back at the end of this year? 

That is highly likely to mean they have £1,743 as the actual figure for 2023-24.

Your Personal Allowance can only change for two reasons, either you have applied for Marriage Allowance or HMRC have estimated your adjusted net income will be £100,002 or more.

Assuming you really mean your tax code allowances have been reduced by £743 then yes, that will mean you pay tax on extra £743 of your earnings.

Your 2025-26 tax code will probably be updated later this year to use the 2024-25 actual information as a new estimate.  Once the 2025-26 tax year has ended and the banks have reported the actual interest for 2025-26 HMRC will review your tax position and notify you if you are a due a refund or have extra tax to pay.  You don't need to do anything to prompt this review.

kimwp

On the letter I received about my tax code for savings interest, there was a deduction from my personal allowance for "tax I owe (earlier year)" and a deduction for "untaxed interest".

I'm pretty sure that the "tax I owe" item is tax on interest over £1000 for 24-25.

And "untaxed interest" is HMRC collecting tax in advance for what they think I will owe in 25-26 due savings interest.

Each deduction equates to the savings interest over £1000 in each case, to collect 20% tax on the interest.

So extrapolating to your situation:
They have said you get untaxed interest of £743 - this doesn't mean you owe them £743. It means they think you will owe tax on £743 at the end of the new tax year (because they think you will earn a total of your savings allowance plus £743). 

Col2018

Dazed_and_C0nfused said:

Col2018 said:

Hello. Sorry for not providing any further updates I've not been well. 

Looking on the HMRC website it says -

We've changed your tax code. you now get Untaxed interest on savings and investments worth £743.

Is this why my wage tax code and personal allowance has changed? Does it mean i'll get taxed extra to repay £743 which I guess was the amount I earned on savings interest over the £1000 allowance in 2024/2025? 

Also I'm  unlikely to earn over the £1000 personal allowance in the 2025/26 tax year so will my tax code change to adjust to this or will I need to claim money back at the end of this year? 

That is highly likely to mean they have £1,743 as the actual figure for 2023-24.

Your Personal Allowance can only change for two reasons, either you have applied for Marriage Allowance or HMRC have estimated your adjusted net income will be £100,002 or more.

Assuming you really mean your tax code allowances have been reduced by £743 then yes, that will mean you pay tax on extra £743 of your earnings.

Your 2025-26 tax code will probably be updated later this year to use the 2024-25 actual information as a new estimate.  Once the 2025-26 tax year has ended and the banks have reported the actual interest for 2025-26 HMRC will review your tax position and notify you if you are a due a refund or have extra tax to pay.  You don't need to do anything to prompt this review.

I wish my income could be more than £100k but that isn't anywhere near what I will earn.