Untaxed interest

sheramber

If you want to know where HMRC got the interest figure from then ask them,

The best time for your wife to phone is as soon as lines open so you are at the front of the queue.

You say people should tell HNRC how much interest they receive. Have you told them how much you have received each year?

Banks and Building Societies send details to HMRC , but not until after the end of the tax year.
 To try to avoid someone being undertaxed HMRC estimate that you will receive  interest based on the last information held by them. 

It has been reported that in one case on here a bank reported ISA interest  to HMRC, resulting in it being treated as taxable interest.

Sarahspangles

Beeblebr0x said:

As I remarked earlier, why should HMRC estimate any tax due on savings when the onus is on the tax payer to declare it? It seems a waste of everyone's time and effort.

The aim is to collect tax due, so taxpayers don’t get into significant arrears or credit. This was rolled out when banks and building societies were no longer asked to collect interest from 2016. It comes up much more frequently now interest rates are higher. 

The taxpayer is responsible for reporting, and checking figures collated from financial institution returns is one way they can do this for all of their income and allowances.

If your wife’s interest seems high, things that can be ‘off’ include Nationwide Fairer Share payments, as these count as interest. Plus financial institutions do make mistakes. We had more of an ‘niche’ issue where interest on accounts held jointly with an elderly parent, and then as executor, was being counted as if it was the attorney/executors. HMRC reallocated the interest when asked.

Beeblebr0x

sheramber said:

If you want to know where HMRC got the interest figure from then ask them,

The best time for your wife to phone is as soon as lines open so you are at the front of the queue.

You say people should tell HNRC how much interest they receive. Have you told them how much you have received each year?

Banks and Building Societies send details to HMRC , but not until after the end of the tax year.
 To try to avoid someone being undertaxed HMRC estimate that you will receive  interest based on the last information held by them. 

It has been reported that in one case on here a bank reported ISA interest  to HMRC, resulting in it being treated as taxable interest.

No, because we've not been liable for tax as I've explained.

sheramber

Beeblebr0x said:

sheramber said:

If you want to know where HMRC got the interest figure from then ask them,

The best time for your wife to phone is as soon as lines open so you are at the front of the queue.

You say people should tell HNRC how much interest they receive. Have you told them how much you have received each year?

Banks and Building Societies send details to HMRC , but not until after the end of the tax year.
 To try to avoid someone being undertaxed HMRC estimate that you will receive  interest based on the last information held by them. 

It has been reported that in one case on here a bank reported ISA interest  to HMRC, resulting in it being treated as taxable interest.

No, because we've not been liable for tax as I've explained.

But now your wife in liable for tax so you can now advise HMRC how much interest you expect her to receive in 25/26.

It will have to be an estimate, just as HMRC have done on the information they hold, because you won’t know the final figure until after the end of the tax year. 

Beeblebr0x

^ Thank you.