Forced into Self Assessment - first timer advice needed (+ a LOT of background info)

Cannonf

Firstly, I have looked at other 'Self assessment first time' posts but nothing seems to fit my circumstances, so I think if I give a little history first so you may understand how I got into this situation in the first place and offer suitable advice

Sorry in advance for the long post


Many years ago, I had a LOT of accounts with money just sitting around - In banks, building societies, isa & so on. So many that I was losing track of what was where & which account I was putting money into and some that I just forgot I even had at the time

Back then I decided to close everything EXCEPT what I consider my main account (with Natwest) & put the money in there, however after being warned that IF the bank went bankrupt I would only be able to claim back a maximum of £85,000 I took a majority out & placed it into an NS&I Direct Savers account instead

Over the years (been working for ~40years - same job, same place) I just saved money in my Natwest account & when it got close to the 85,000 (or whenever the mood took me) I transferred a lump sum to the NS&I account.

Now it's come back & bitten me in the butt.

Over the past few year, I kept getting letters from Tax man for 'underpaid taxes' & it took a while before I managed to get a simple answer from them - basically it's due to my savings 

This last tax year (April 2024-April 2025) I got a shock when they sent me such a letter in November for unpaid taxes of >£8000 - which incidentally I paid off in 1 lump using a Direct money transfer at that time - I already assumed this high tax was is because of my savings
They sent ANOTHER letter end of December stating basically 'oops, actually by April it would be >$10,000 & they'll adjust my tax code to pay it off' (which I assume is for the ~£2000+ difference since I already paid off ~£8000)

As of March (2026) I receive yet another letter from them that basically says:-
    'Here's your log in details for self assessment, download app & do it' - Huh !!!

It took me 3 attempts calling them (twice getting cut off while on hold talking to a real person) & then after being passed to a different department, after a lot of gobbly-gook tax talk from representative, I believe in VERY layman simple terms that this has all come about due to the fact that 'because last year (24/25) you received over £10,000 interest on your savings, we're forcing you to do self assessment now'

Please correct me if I'm wrong in my understanding


Now onto the 'First timer Self Assessment' advice required since I have NEVER had to do anything like this in 40 years working in same job.

As far as I know the ONLY information I will need to give are the following:-
P60 (how much I've earned working at the factory) and how much money interest I get on my NS&I savings - something the Tax man should aready know since NOTHING has changed in 40 years (No marital status/ change of address/ job changes etc). The bank account doesn't get interest so I don't think that counts

NONE of the other stuff I've read online, to the best of my knowledge, if relevant.

I am NOT self employed, do NOT owe a company, have NO company expenses, do NOT receive any state or company benefits, NO additional incomes from pensions, rental/property, trusts etc. NO dividends from company shares

With that in mind, I am also unsure of a couple of things I have as to whether they count as 'income/dividend' (or whatever) & contributes towards my 'unpaid taxes'
(I had completely forgot I had these until I started looking through old papers because of this situation)

So here's a list of 'Money' that I have which some I think I need to claim on the self assessment

0: P60 for 2024-25 - how much I've earned during the year (can't give then 2025-26 obviously as I won't get that until April 2027)

1: Natwest current account - main account where wages are paid in
2: NS&I Direct savers account - All of my life time savings with yearly interest added being 'left in'

I know this doesn't need informing them about
3: NS&I ISA - opened this up 2 years ago - yeah I know, should've done it MUCH earlier

I also have these I am UNSURE if they could apply:
4: I have something called 'Wealth Builder' from a company called 'Phoenix Life' (originally 'Citibank' > 'Lincoln' > 'Sun Life of Canada') that I put £100/mth and it 'matures' on my birthday on 2031 when I'm 64
If I recall this was sold to me as 'something like an AVC' & being young & just starting work thought it'll be handy addition for when I retire. It states 'Premiums are being paid into this plan'

5: I have 3 'Investment Bonds' (with Premiums are not being paid into your plan) that I opened back in 1999-2000. There's no maturity date on them so NOT typical 2/3/5 year bonds, but I believe I can 'cash them in' at anytime if/when I need the money. I THINK tax will be paid once cashed in so I don't think these count

On NONE of these do I receive any additional income (as in 'cash in hand') - any money earned  (interest etc) is put back into the respective account so that its just gets higher each year. The money from my Natwest account is enough for me to live by.

So, any advice as to WHICH of these things NEED to be used in 'Self Assessment' and which are exempt


FYI, the main reason for having so much savings is the fact that I'm in the fortunate (?!) situation that I'm single, no children, & have no mortgage/rental outgoings
 - I still live at home with my disabled mother which I help pay 1/2 towards all typical expenses like gas/elec/water/rates/repairs etc.The money most people would usually spend morgages etc is money I can save.


I have also been thinking of ways to 'reduce' the savings interest so as to reduce the huge 'unpaid tax' bills (I'm now willing NOT to get interest on some savings if it saves me from these unexpected unpaid tax bills & forced self assessments).

I already have the ISA so thats not an option, but some people have suggested 'reopening bank account that dont pay interest' - so basically go back to how I was all those years ago - however I've got to be careful that if I do this I don't open accounts where Natwest is 'shared' with (I think Lloyds is involved with Natwest somehow but not sure how) otherwise I'm stuck at the $85,000 protection limit.

I believe I should be safe IF I opened accounts with someone like Nationwide & Monzo, put the max in (£85,000) so this would reduce my 'savings' by a total of $170,000 & bring my (current) saving interest to below the £10,000 limit

Is this a good idea ??

Other have suggested £50,000 in premium bonds... but what if I win ££££, the winnings won't be taxed at the time I know,but until I spend it it'll be stuck in the NS&I saving account.. & I'm back at square one - won't I ?

Sorry for the very long post,and Thanks in advance for any help given (just give it in VERY simple terms please - I get confused easily)

Dazed_and_C0nfused

Sorry far too much completely superfluous detail to read it all.

The letters you were sent clearly show what income HMRC were taxing.

HMRC do not have interest details for 2024-25 yet.  If someone from HMRC told you that they are mistaken.  Banks do not report the interest for 2024-25 until after 5 April 2025.  And they have until 30 June 2025 to report the details (for 2024-25).

A Self Assessment return will probably take you 15/20 minutes to complete once you have all the interest details to hand.  ISA's are exempt form tax so if you have Cash ISA(s) you ignore those.

Having interest of more than £10,000 is enough for HMRC to want you to file a return.  Self Assessment is not something just for the self employed or other scenarios you have focused on.

I suspect if you look at those letters again you will find you are currently conflating two different tax year.

An actual tax owed amount >£8000 for 2023-24 and an estimate of tax owed for 2024-25.

It is highly unlikely to be £8,000 + £2,000.  But as ever with tax the devil is in the detail.  So take another look at what you were sent.

This last tax year (April 2024-April 2025) I got a shock when they sent me such a letter in November for unpaid taxes of >£8000 - which incidentally I paid off in 1 lump using a Direct money transfer at that time - I already assumed this high tax was is because of my savings

They sent ANOTHER letter end of December stating basically 'oops, actually by April it would be >$10,000 & they'll adjust my tax code to pay it off' (which I assume is for the ~£2000+ difference since I already paid off ~£8000)

Finally, how you can be posting this on MSE or even considering it beggars belief.  If it is too much hassle for you then pay an accountant to do your tax return.  It's (very, very,) easy money for them and less hassle for you.  But at the end of the day 60% or 80% of something is better than 100% of nothing.  Start ignoring whoever "some people" are.

some people have suggested 'reopening bank account that dont pay interest' -

NB.  Where on earth have you got the idea Premium Bond winnings are taxed 🤔.  You need to read up on some basic facts before doing anything else!  

masonic

Some people prefer to self-assess as it means they don't end up with continual tax code adjustments and assumptions about future income that turn out to be inaccurate.

Looks to me like it would just be the employment income and savings income you'd need to capture. The investment bond would be chargeable if you cashed in, and the Wealth Builder product sounds like a life fund that would not be generating taxable income while it is active. You should investigate these further to confirm the specifics.

If you leave it long enough (e.g. until autumn), the employment stuff should have been received by HMRC and autofilled on the return, leaving you just to enter the savings income.

I can't really follow the logic to reduce your interest income if it means receiving less than you would have after tax. You just need to add up the interest that you receive once a year, which can be made reasonably simple by not having dozens of different accounts. Premium bonds will generally not beat the best savings rates for basic rate taxpayers.

400ixl

You probably spent more time writing all that than it would take to just follow the instructions and fill in the self assessment.

Essentially they want to know all of the non tax exempt interest you were paid in that financial year. 

Any ISA interest, Premium Bond winnings are tax exempt. Any payments to schemes you will not have paid to you until future years are not relevant. Essentially any normal bank account interest, and dividends from shares and any capital gains from any assets sold.

Then the information from your P60 and you are pretty much done. May be some tax due if you have private medical from work or other similar non tax exempt income elements.

You sound like a candidate for getting a lot of these savings that are in general interest accounts into ISA protection asap.

Cannonf

400ixl said:

You probably spent more time writing all that than it would take to just follow the instructions and fill in the self assessment.

Essentially they want to know all of the non tax exempt interest you were paid in that financial year. 

Any ISA interest, Premium Bond winnings are tax exempt. Any payments to schemes you will not have paid to you until future years are not relevant. Essentially any normal bank account interest, and dividends from shares and any capital gains from any assets sold.

Then the information from your P60 and you are pretty much done. May be some tax due if you have private medical from work or other similar non tax exempt income elements.

You sound like a candidate for getting a lot of these savings that are in general interest accounts into ISA protection asap.

Yes it took a while but since I've not signed up /downloaded app or done any of that stuff I don't know WHAT'S on the forms for self assessment so don't know what to expect - reading online you see things you have no experience with, have no idea what certain terms relate to or had any experience - it can be very scary.... expecially if you get easily confused as I do.
I personally don't want to do all this 'paperwork' that the tax man should already know - I was 'happy' with them doing this behind the scenes & I just pay off whats owed

As I mentioned I don't get dividends from shares or captial gains since I don't sell any assets - the only 'shares' I have are probably dealt somehow in the 'managed bonds' & the company that holds them.

It does sound like I was mainly right in the fact they ONLY want details from P60 & savings interest - just annoyed they never consulted me about 'do I want self assessment ?' or tell me WHY they're forcing me to do it - they just went ahead & did it.

How would you feel if all of a sudden after 40-ish years someone comes up to you and say, 'Despite us doing this for you all this time, you're now got the responsibility of doing it even though you're never done it before' ?

TheSpectator

Cannonf said:

400ixl said:

You probably spent more time writing all that than it would take to just follow the instructions and fill in the self assessment.

Essentially they want to know all of the non tax exempt interest you were paid in that financial year. 

Any ISA interest, Premium Bond winnings are tax exempt. Any payments to schemes you will not have paid to you until future years are not relevant. Essentially any normal bank account interest, and dividends from shares and any capital gains from any assets sold.

Then the information from your P60 and you are pretty much done. May be some tax due if you have private medical from work or other similar non tax exempt income elements.

You sound like a candidate for getting a lot of these savings that are in general interest accounts into ISA protection asap.

Yes it took a while but since I've not signed up /downloaded app or done any of that stuff I don't know WHAT'S on the forms for self assessment so don't know what to expect - reading online you see things you have no experience with, have no idea what certain terms relate to or had any experience - it can be very scary.... expecially if you get easily confused as I do.
I personally don't want to do all this 'paperwork' that the tax man should already know - I was 'happy' with them doing this behind the scenes & I just pay off whats owed

As I mentioned I don't get dividends from shares or captial gains since I don't sell any assets - the only 'shares' I have are probably dealt somehow in the 'managed bonds' & the company that holds them.

It does sound like I was mainly right in the fact they ONLY want details from P60 & savings interest - just annoyed they never consulted me about 'do I want self assessment ?' or tell me WHY they're forcing me to do it - they just went ahead & did it.

How would you feel if all of a sudden after 40-ish years someone comes up to you and say, 'Despite us doing this for you all this time, you're now got the responsibility of doing it even though you're never done it before' ?

Nobody needs to 'consult' with you on anything, your level of savings income means you are required to complete a Self Assessment Tax Return, simple as. Out of interest do you expect all Government Departments etc to 'consult' with you?

Always makes my mind boggle that seemingly intelligent people can get so worked up about completing half a dozen boxes on a form and this mentality that you would forego interest to avoid completing said form.......wow.

400ixl

Which is exactly why getting yourself registered and access asap and then having a look at it is a better way to go than worrying about it and getting all sorts of random questions in your head.

It will actually be quite straight forward for you given what you have said is the reason you are having to do it.

If you have questions when trying to fill it out then people can help, there are lots of us who do it every year. If it is for the financial year ending this March (24/25) then as soo as you have your P60 from your employer (usually in May) and you have calculated all of the interest you received from your accounts (what was paid to you)  for that period you will be good to go.

Any issues at that point then shout and people can help. But relax its not complicated or anything to worry about, you have plenty of time.

subjecttocontract

Just get an accountant to do your self assessment.

Ayr_Rage

@Cannonf you appear to be under the misconception that HMRC should advise you about your tax affairs.

In fact it is the other way around, it is your responsibility to file a return when you have certain income and when those bonds mature you'll need to understand what you can take free of tax and what may be owed, depends on the product.

Time for some homework or to get an accountant if you can't get your head around it.

UncleK

As with other posters, I respectfully suggest that self assessments are not difficult but can appear very daunting to a first timer and thus can appear not straightforward. I think in the case that the OP is talking about, the vast majority of the self assessment is not relevant, so it's matter of taking some deep breaths and taking some first steps.
As for savings, I would suggest it's better to earn some interest and pay some tax rather than earn nothing, but that's for another day - I suggest get the self assessment out of the way first.

Bigwheels1111

For me self assessment is easy-peasy, only 2 main boxes.
Income and untaxed savings. Lots of box ticking and name address etc but 20 minutes max.
If yours is more complicated, just get a chartered accountant.