HMRC tax code reduced due to savings interest - what happens after I’ve spent the savings?

Grabe78

I haven't lived in the UK for about 10 years, but have been paying into a savings account all the time I've been out. By July 2025, when I moved back to the UK, I had about 250k in an easy access account.

I started a PAYE job in July of this year, and got given the tax code 669L, I assume to reflect the interest HMRC calculated I would make on my savings. I have just bought house and used all of my savings as a deposit. Should I contact HMRC to inform them that the money is now gone or will the bank update them automatically at the end of the FY? And the latter, would that mean I then get a rebate at the end of the FY? 

Apologies for the potentially basic question, the UK tax system is all quite new to me. I could write books about the Dutch system though... 

eskbanker

If you can calculate a realistic figure for your taxable income for the whole of the 2025/26 tax year then you can advise HMRC of this in order for them to recalibrate your PAYE tax code accordingly, if necessary, but if you don't do that then it'll all come out in the wash after the end of the tax year and any under/overpayments processed then.

Has any tax been paid on that interest income in prior tax years?

Grabe78

Thank you very much for the reply - good to hear it will all come out in the wash.

I didn't pay any tax on the interest whilst I was non-UK resident - from my understanding, I didn't have to, but I am always worried I made a mistake. For the last 6 years I was living in countries with double tax treaties, so even though the interest was quite high, I filed in my countries of residence instead. For the prior 4, I never made close to the UK personal allowance on interest, as the amount was much smaller then.

Ayr_Rage

Were you even eligible to have a UK savings account when you were overseas?

Most require you to have a UK address and be resident for tax.

eschaton

You might have future tax code adjustments to come. 

My tax code adjustment this year reflects interest earned in the 2023-24 tax year. 

Tax from 2024-25 will be payable next year. Last year I managed to just stay within the £1000 taxable interest so expecting a clear year next tax year. It’ll be tight this year but currently projecting to just stay within it again.