Tax numpty question

elsien

Morning all.
As someone who has never had to complete any self assessment and has basically relied on my employer, any banks and HMRC to get things right between them (no judgement please), I have had an HMRC letter telling me I have underpaid my tax for the tax year 23 - 24 by £141
I have no clue why and the explanatory letter is clear as mud to me. 
What is the starting point for working out what is going on? 

DullGreyGuy

Log onto your online tax account with HMRC


Banks dont sort your tax out, interest is paid gross and you need to tell HMRC if you receive over £1,000 in interest across all your different savings excluding ISAs, for example. 

elsien

Thank you - I wasn't aware I had an online tax account. Sorry for being thick but what information will it give me that I need to pay particular attention to? 

I thought I remembered past savings accounts with tax being deducted - maybe I've imagined that.

Dazed_and_C0nfused

elsien said:

Thank you - I wasn't aware I had an online tax account. Sorry for being thick but what information will it give me that I need to pay particular attention to? 

I thought I remembered past savings accounts with tax being deducted - maybe I've imagined that.

That ended nearly ten years ago now.

Flugelhorn

DullGreyGuy said:

Log onto your online tax account with HMRC


Banks dont sort your tax out, interest is paid gross and you need to tell HMRC if you receive over £1,000 in interest across all your different savings excluding ISAs, for example. 

I thought you only had to tell them if it was over 10k now - they get details of interest directly from banks 

elsien

My interest certainly isn't going to be over 10K. If only.

eskbanker

elsien said:

I have had an HMRC letter telling me I have underpaid my tax for the tax year 23 - 24 by £141
I have no clue why and the explanatory letter is clear as mud to me. 
What is the starting point for working out what is going on? 

Establishing how much interest you received from non-ISA savings accounts during 2023/24 would be the best place to start - check statements, certificates, etc, and take it from there....

elsien

Older person alert  - it used to be much easier when you got proper paper savings account statements because I would open them and do a quick scan straight away.
Now I get emails just telling me to check my online account for messages, and then I forget and never get round to logging on and looking.

Bookworm225

elsien said:

My interest certainly isn't going to be over 10K. If only.

don't get confused by that
the £10k figure is the threshold for non ISA interest above which you have no option but to register for self assessment tax return.

if your total of all non ISA interest is less than £1,000 then you do nothing 

if your total of all non ISA interest is between £1,000 - £10,000 then HMRC will use the info sent to them by the banks to work out if you owe tax on the interest and should seek to recover that by adjusting your tax code so you pay the tax via deduction from your employment income. 
It is however your responsibility to monitor that by checking the figures HMRC use via your personal tax account details and then contact HMRC to ask for an adjustment if anything is wrong 

DullGreyGuy

Flugelhorn said:

DullGreyGuy said:

Log onto your online tax account with HMRC


Banks dont sort your tax out, interest is paid gross and you need to tell HMRC if you receive over £1,000 in interest across all your different savings excluding ISAs, for example. 

I thought you only had to tell them if it was over 10k now - they get details of interest directly from banks 

yes, a miskey from me. 

But that info from the banks for £1k-£10k results in a tax liability 

elsien said:

Thank you - I wasn't aware I had an online tax account. Sorry for being thick but what information will it give me that I need to pay particular attention to? 

I thought I remembered past savings accounts with tax being deducted - maybe I've imagined that.

For each financial year it will show your earnings, taxes calculated, taxes paid, any late payment interest, fines etc

Banks stop taking interest from saving a decade ago

p00hsticks

elsien said:

Older person alert  -

Apart from untaxed interest on savings, the other increasingly common reason for an 'older person' to have underpaid tax is if their (taxable but not taxed at source) State Pension income is higher that the persons annual tax allowance. 

If there is other taxable income such as a private pension in play,  then HMRC may be able to collect the tax due by adjusting the tax code on the private pension, but if not then they'll ask for payment directly.