Self Assessment and Interest on Savings

PoGee

I opened 2 savings accounts when my kids (now adults) were small. On adding up the interest for my self assessment, I split it in halve (2 adults) but this is seemingly incorrect. To add to the confusion, I put the reduced (halved) interest in the wrong box - the taxed at source box. E.g, £450 but the bank contacted hmrc saying it was £900 and so hmrc popped that into the untaxed interest from savings box and gave my interest earned as  £1350 - I saw this on my SA302 letter.
I now have a small amount of tax to pay as over the £1000 threshold. It's a bit confusing - they said they take 4/5 of the taxed at source figure(??) to work out my tax liability.
[I had called them to query this. I then explained why I halved it and that I put this number into the incorrect box.]
They requested info that's in my last payslip, before they can amend it, which I'll get at the start of the week.
Should the interest be split? I guess not as otherwise the bank would've sent hmrc the lower figure.
It took over an hour to get the answer about how they arrived at the higher figure and I'm in 2 minds about whether to just leave it as it is and pay the small extra tax amount. Will they expect me to call again? I've a health check coming up, which I'm apprehensive about so got other things on my mind.

Dazed_and_C0nfused

PoGee said:

I opened 2 savings accounts when my kids (now adults) were small. On adding up the interest for my self assessment, I split it in halve (2 adults) but this is seemingly incorrect. To add to the confusion, I put the reduced (halved) interest in the wrong box - the taxed at source box. E.g, £450 but the bank contacted hmrc saying it was £900 and so hmrc popped that into the untaxed interest from savings box and gave my interest earned as  £1350 - I saw this on my SA302 letter.
I now have a small amount of tax to pay as over the £1000 threshold. It's a bit confusing - they said they take 4/5 of the taxed at source figure(??) to work out my tax liability.
[I had called them explaining the situation - why I halved it and that I put this number into the incorrect box.]
They requested info that's in my last payslip, before they can amend it, which I'll get at the start of the week.
Should the interest be split? I guess not as otherwise the bank would've sent hmrc the lower figure.
It took over an hour to get the answer about how they arrived at the higher figure and I'm in 2 minds about whether to just leave it as it is and pay the small extra tax amount. Will they expect me to call again? I've a health check coming up, which I'm apprehensive about so got other things on my mind.

You seem extremely confused.

Why would you split your own interest in half 🤔

Why would you leave an incorrect entry on your return, giving you £90 of tax that was never deducted and being taxed on £450 you presumably should be taxed on 🤔

Are you the subject of a formal investigation from HMRC (used to be known as a S9A enquiry).

What has your current income got to do with your tax return for 2024/25 🤔

sheramber

If you split the interest in half where did you report the other half?

PoGee

I'll try explaining again - Split in 2 as accounts in 2 names, which hmrc understood, once I called them. No, I'm not being investigated as I called them, not them me. I do not have taxed at source interest, just the £900, which is less than £1000.
Like I said at the start, the £450 figure was put in the wrong box, which hmrc also accepted when I called them.If I leave the figures as they are, I have a small amount of extra tax to pay. If I call to amend, then as the total is less than £1000, there is no extra tax to pay.
They said they would amend the figures over the phone but I needed to go through security - one question related to my payslip, which I didn't have to hand as our payslips are online.

PoGee

sheramber said:

If you split the interest in half where did you report the other half?

I had assumed that the other half would be under each child's name. However, as hmrc amended this, there is no argument about the 'other half'. 

PoGee

I looked at this online before filling out the return. One source says the following -
''How HMRC splits interest on joint accounts. The default position is simple: HMRC assumes any interest earned on a joint savings account is split equally between the account holders. That means each person is taxed on 50% of the interest, regardless of how much they deposited.''

p00hsticks

Are these accounts in your name , or the names of your now adult children ?

PoGee

p00hsticks said:

Are these accounts in your name , or the names of your now adult children ?

I called the bank. They said I was the lead name but that my kids names were still on the accounts. This is why I wrote here - if the bank accepts that each account is a joint account, why they then said to hmrc that the total interest belonged to me. I'm happy to accept it but just wondered what the correct position should be. The bank couldn't answer that question. I seem to have problems explaining things here and it took over an hour when I called hmrc to see how they got to the higher interest figure so the thought of explaining everything again to someone else, isn't something I'm relishing - all to save a few pounds. 

PoGee

When I tried to change to kids names only years ago, the bank said that the kids needed to be there. Kids refused to go as 'we're busy'. They're very old accounts. The bank now says I can close the accounts and get cheques. 

DRS1

@sheramber and @Dazed_and_C0nfused So as a matter of academic interest how do you report interest from a joint account on a self assessment form?  I had a look at the notes and they don't say anything about joint accounts.  Are both holders meant to report 100% of the interest and then include some explanatory note saying £x of the interest came from a joint account so please only tax half £x?

Yes I know there is some form you can fill in if you want the Revenue to know that the split should not be 50/50 but if you are quite happy with 50/50 why shouldn't
a) both joint holders report 50% of the interest on their own tax return and
b) the bank report the interest in the same way.  Or at least have a way to report joint accounts as joint accounts and not just as an account of the first named holder.

OP If the accounts are really for the kids then I don't see why you are paying any tax on the interest at all.  Surely it belongs 100% to the relevant kid? 

jem16

PoGee said:

p00hsticks said:

Are these accounts in your name , or the names of your now adult children ?

I called the bank. They said I was the lead name but that my kids names were still on the accounts. This is why I wrote here - if the bank accepts that each account is a joint account, why they then said to hmrc that the total interest belonged to me. I'm happy to accept it but just wondered what the correct position should be. The bank couldn't answer that question. I seem to have problems explaining things here and it took over an hour when I called hmrc to see how they got to the higher interest figure so the thought of explaining everything again to someone else, isn't something I'm relishing - all to save a few pounds. 

It sounds like the bank consider you to be the account holder and you're simply holding the account in trust as such for them. As you have deposited the funds then the tax on the  interest is all yours as far as I'm aware.

https://www.gov.uk/savings-for-children