Self-assessment and discrepancies

kidwell25

After a long period of low interest rates it's only been in the last 3 years that I've exceeded my personal savings allowance. In both 22-23 and 23-24 HMRC's figure for the interest I received hasn't matched my own records. However as the differences were only very small I took the view that it would all even itself out in the long-run and didn't warrant any action.

In 24-25 my taxable interest exceeded £10,000, so for the first time I will need to self assess. My question is, do HMRC cross-refer between the figures provided via self-assessment and those that are given to them by the banks? And if so, how are any discrepancies dealt with? I'm wondering whether to just get on with it now (which would presumably mean my tax code could be adjusted much earlier) or if it makes more sense to wait until later in the year once the banks have already provided HMRC with the figures.

eskbanker

Yes, HMRC can validate figures supplied on self-assessments, and investigate anomalies.  However, if you have a set of interest values that you're confident about, i.e. based on statements or certificates, then there's nothing to stop you declaring those whenever you're ready - that's how self-assessment is intended to work!

Chances are that any tax code adjustment would apply to 2026/27 not the current year, but if you owe them more than £3K then you wouldn't have the option of collection via PAYE anyway....

Bigwheels1111

Last  year 23/24 I got over 10k interest.

Rather than mess around I called HMRC and asked if I needed to file, They said yes and a letter arrived 3 day later asking me to file.

I filed and that was it no further contact from HMRC.

So on the 6th of April this year I filled again, I do not expect to hear from them again.

I keep very good records of interest payment, bank switching bonuses etc, My total is correct to the 0.01p.

The info banks send is not. Some add interest earned but not accessible in that year causing issues.

Keep good record and report them. Raisin and H&L do not report interest to HMRC, so another spanner in the works.

I'm sure they will contact you if they are not matching up.

Next year they estimate I will owe 2k plus in tax, I have no idea where this total is from but what do I know.

My total is under £18,570 so no tax will be owed.

eskbanker

Bigwheels1111 said:

My total is correct to the 0.01p

You have accounts that pay interest in hundredths of a penny?

kidwell25

Thanks both. I will indeed owe more than £3k and wasn't aware of the PAYE limit, so good to have found out that I will need to ring-fence some savings for paying that bill.

I've read a number of times on this forum about Raisin not reporting, but strangely the one time I queried this on the phone with HMRC they read out the interest on my QIB account held within Raisin, so they'd got that info one way or another. So if that's not being dealt with consistently that's another huge potential for error!

Swipe

If you'll owe £3K make sure you prepare for a tax bill of £4.5K (including the first payment on account) payable on Jan 31st. This catches many first timers out.

kidwell25

Thanks for that tip! As I haven't even registered yet I didn't know any of the details, so have just looked it up. I think I'll actually owe around £7K, so will need to prepare myself for a £10.5K first bill (yikes!)

Just wondering, though, how this will work given that HMRC has already changed my tax code for 25/26 to collect what they predict I will owe on my savings interest this year. If that code remains unchanged, and I do the two payments on account, I'll actually have overpaid by close to £3k in 25/26. Is there a way of avoiding that? I know I'd get it back the following year, but I'd rather it were sitting in an interest earning account than in HMRC's coffers! Or will they amend my tax code back to only taking account of my employment income after I file the return (which would be another argument for filing it early I presume?)

masonic

The calculation will take into account any tax already paid through PAYE, so you will not be asked for payment for more than you owe in 2024/25. A payment on account may be required if your unpaid tax is above a threshold. If your actual income in 2025/26 is going to reduce, then that can be addressed separately.