HMRC calculation of tax owed on savings interest

Dazed_and_C0nfused

DRS1 said:

Bobblehat said:

DRS1 said:

Dazed_and_C0nfused said:

IOWJJBTM2025 said:

Hi All - Just to clear up with reference Self Assessment and State Pension.
Mum's finance's are very simple. She does not work, has 3 very small pensions and a state State Pension. I should also add that when dad passed away she inherited some additional state pension, so she gets slightly more than basic state pension.
They take 50% tax at source off the 3 personal pensions - apparently they cannot take more than 50%.
This leaves the State Pension where she owes a small amount of tax. Last year it was £80. It will increase every year because the state pension goes up and the tax free amount has been frozen for a few years.

It was interesting to see Martin Lewis talking to Rachel Reeves who committed that that are working out ways to prevent pensioners having to complete self assessment when the standard pension goes over £12570 basic tax threshold. I can confirm that some pensioners already do have to complete self assessment and the response from HMRC years ago was "If the pensioner is unable to complete they should employ an accountant" 

To be fair It does not take long for me to complete the self assessment - there are only a few boxes to fill in and some boxes are automatically filled in for me. My point here is that there is no way that my mother would be able to do this by herself.

There is no reason whatsoever for someone with the scenario you describe to need to compete a Self Assessment return.

And there hasn't been for many years now.

I have no idea how 3 pension companies are deducting 50% tax, have never known that happen since the 50% tax rate was abolished.  

I cannot see how more than one is deducting 50%. Maybe you could post the tax codes being used for those 3 pensions?

You/she may find it simpler to continue what you have been doing but, based on what you have posted, it isn't necessary.

If all three have received K tax codes then presumably it could happen?  Or can you only ever have one K code?

I have one small(ish) company pension taxed fully at 20% and a second small(ish) company pension taxed with  K Tax Code, which effectively reduces the gross by ~40%. As expected, the SP is paid with no tax.

I leave HMRC to adjust the tax codes each year, which they have since I reached SP age. I cross-check my records each year to see if the total I think I owe them is not too much more than what they think I owe them! It usually works out OK each year and I expect an increasing "K" number in the next year if I calculate they haven't taken enough 

It will be interesting to see what they do when the deduction on the second pension hits the 50% cap.  Will they fiddle with the code on the first pension.

When I started an annuity last year they gave me a K code to start with but agreed to drop that.  At the time I asked if they could make it a D code but they said they would not apply a D code to the first stream of PAYEable income.  Now I have a second annuity they have given that a D0 code but not the first one.  I am not sure why they have these odd rules about what codes can be applied against different bits of income.

As it stands the deduction on a second pension should never hit 50%.  Maximum currently is 45%.  But is more often 20%, even when 40% or 45% would minimise the tax to be paid direct to HMRC.

I think there must be a rule or policy in place which prevents the D codes being issued if you aren't actually a 40% payer, even though it would help the exchequer!

ThePirates

Related question: do you have to go down the tax code change route or can you just pay a lump sum for what you owe HMRC and leave your code unchanged?

Dazed_and_C0nfused

ThePirates said:

Related question: do you have to go down the tax code change route or can you just pay a lump sum for what you owe HMRC and leave your code unchanged?

You should be able to pay it direct to HMRC if you want (once a calculation has been issued).

alanwsg

How do you find out what interest on savings HMRC "Think" you've received?
I've been all over their UKgateway site, and I can't see the info anywhere.

BreakingGlass

alanwsg said:

How do you find out what interest on savings HMRC "Think" you've received?
I've been all over their UKgateway site, and I can't see the info anywhere.

Write to HMRC or give them a call and ask for BBSI (Bank and Building Society Interest) data for the Tax Year in question.  It's usually quite late in the year that they are in a position to provide such information, but you may be able to get the TY24/25 info if you ask now.  It may take several weeks for a response, but that's par for the course nowadays.

alanwsg

BreakingGlass said

Write to HMRC or give them a call and ask for BBSI (Bank and Building Society Interest) data for the Tax Year in question. 

It's not available on-line then?

BreakingGlass

alanwsg said:

BreakingGlass said

Write to HMRC or give them a call and ask for BBSI (Bank and Building Society Interest) data for the Tax Year in question. 

It's not available on-line then?

Sadly no!  Maybe in the future when the very same taxpayers have funded a multi-billion pound HMRC computer upgrade! 😉

Ayr_Rage

alanwsg said:

BreakingGlass said

Write to HMRC or give them a call and ask for BBSI (Bank and Building Society Interest) data for the Tax Year in question. 

It's not available on-line then?

Not available in your online account and never has been.

Dazed_and_C0nfused

alanwsg said:

BreakingGlass said

Write to HMRC or give them a call and ask for BBSI (Bank and Building Society Interest) data for the Tax Year in question. 

It's not available on-line then?

Usually it's only the total figure being used an estimate for this tax year that's available online. 

Which is generally the same as the actual amount HMRC have for the previous tax year.

But it's only a total, not a breakdown of interest from individual accounts.

wmb194

Ayr_Rage said:

alanwsg said:

BreakingGlass said

Write to HMRC or give them a call and ask for BBSI (Bank and Building Society Interest) data for the Tax Year in question. 

It's not available on-line then?

Not available in your online account and never has been.

It was for a while for PAYE taxpayers labelled as 'beta' but there were so many errors and, judging by the long thread on it, so many people spending hours on the phone correcting the abysmally poor data only for it to revert to the incorrect data a few days later that HMRC gave up on it.

The original thread appears to have been deleted but this thread gives an idea of how it worked:

https://forums.moneysavingexpert.com/discussion/5969272/interest-details-on-hmrc-personal-tax-account-online