Savings - tax on interest

JoSoap02

I am about to inherit some money.  
What I need to know please is how the interest will be taxed (some will be in ISA, I am talking about savings account)
I have income of £17,000 in pensions but this money will generate £3000 +  interest annually.
Do the bank not take the tax off as they used to do ?   Or does it become part of PAYE , tax code etc  ?

Dazed_and_C0nfused

JoSoap02 said:

I am about to inherit some money.  
What I need to know please is how the interest will be taxed (some will be in ISA, I am talking about savings account)
I have income of £17,000 in pensions but this money will generate £3000 +  interest annually.
Do the bank not take the tax off as they used to do ?   Or does it become part of PAYE , tax code etc  ?

Have you applied for Marriage Allowance?

If not then first £1,570 will be taxed at 0% and the remainder at 20%.

Banks now pay the interest without deducting tax.  They report the interest to HMRC and HMRC calculate the tax owed.

On that level of income the tax owed will normally be collected via restriction to your tax code (in the following tax year after they calculate the tax owed).

They may also include untaxed interest on your tax code, usually based on the latest info received from the banks.

kassy64

Last year I just received a letter in the post from HMRC asking whether I wished to make a one off payment for the tax due, or if I declined and did nothing my tax code would be changed the following year to recoup the tax payable. I think the letter came through in December 2024 for the tax year 23/24. I opted to pay via one off payment (they give instructions on how to pay).