Savings interest over £10k and registering for self assessment

Autumn_Sun

I suspect my elderly parents will each have received in excess of £10k each of savings interest for the last tax year. They don’t discuss money much so it’s difficult to tie them down. If they don’t register for self assessment to declare this what’s likely to happen with HMRC? 

eskbanker

Is this a one-off or will they have earned substantial interest in previous tax years too, in which case how has the tax collection been handled before?

Autumn_Sun

It’s the first year they’ve earned substantial interest. Previous years’ savings were held in accounts that were earning next to nothing. They had a meeting with the bank manager who advised them on a better savings account. With the increase in interest rates it is a big climb in interest received.
The previous tax year was dealt with by a change in my father’s tax code

Albermarle

I would think that even if they do not fill in SA's, tax will still be levied on the interest earned. Calculations will happen automatically around September (ish) for the previous tax year.
Depending on the amount owed, there may be a request for payment, or an adjustment of any tax codes they might have ( for private pensions?) 
Possibly HMRC will contact them eventually to fill in a SA, or they may not pick up on it. There was some talk about that £10K level being increased at some point.
I am guessing a little bit but should be something along those lines.

MeteredOut

Autumn_Sun said:

It’s the first year they’ve earned substantial interest. Previous years’ savings were held in accounts that were earning next to nothing. They had a meeting with the bank manager who advised them on a better savings account. With the increase in interest rates it is a big climb in interest received.
The previous tax year was dealt with by a change in my father’s tax code

Not a direct answer to your question, but have you advised them to look into Cash ISAs? 

Autumn_Sun

MeteredOut said:

Autumn_Sun said:

It’s the first year they’ve earned substantial interest. Previous years’ savings were held in accounts that were earning next to nothing. They had a meeting with the bank manager who advised them on a better savings account. With the increase in interest rates it is a big climb in interest received.
The previous tax year was dealt with by a change in my father’s tax code

Not a direct answer to your question, but have you advised them to look into Cash ISAs? 

Oh yes! Too little too late for them though. 

Autumn_Sun

Albermarle said:

I would think that even if they do not fill in SA's, tax will still be levied on the interest earned. Calculations will happen automatically around September (ish) for the previous tax year.
Depending on the amount owed, there may be a request for payment, or an adjustment of any tax codes they might have ( for private pensions?) 
Possibly HMRC will contact them eventually to fill in a SA, or they may not pick up on it. There was some talk about that £10K level being increased at some point.
I am guessing a little bit but should be something along those lines.

That’s helpful, thank you

RunsFromRobots

Autumn_Sun said:

It’s the first year they’ve earned substantial interest. Previous years’ savings were held in accounts that were earning next to nothing. They had a meeting with the bank manager who advised them on a better savings account. With the increase in interest rates it is a big climb in interest received.
The previous tax year was dealt with by a change in my father’s tax code

I was in the same position with my mum for 2023-2024 only I didn't pick up on it until Christmas 2024 when she asked me how much interest she'd earned.

I hurriedly reactivated her UTR (she was self-employed in a past life) and did the self-assessment forms. With no photo ID to open a Government Gateway account I had to do it by post with an SA100 and sent if off before the end of January 2025.

It didn't stop us from getting a small fine, but it's been paid. I'm prepared now and am currently doing her assessment for 2024-2025.

I'm not sure what would have happened if I hadn't done this though. A small fine for doing it could be a lot worse if not doing one?