Tax on savings interest

taxavoider1

Hi all, I had an unwelcome message from HMRC saying I had not paid enough tax during current tax year.
Both myself and my wife are pensioners with additional company pensions.
We have a savings account that produces interest in excess of £1000 allowance, my state and company pensions take me over £17000 and so pay 20% tax on this, my wife's pensions do not amount to the £17000 so if account was changed just to her name would she have up to the £5000 tax free allowance? 

Dazed_and_C0nfused

taxavoider1 said:

Hi all, I had an unwelcome message from HMRC saying I had not paid enough tax during current tax year.
Both myself and my wife are pensioners with additional company pensions.
We have a savings account that produces interest in excess of £1000 allowance, my state and company pensions take me over £17000 and so pay 20% tax on this, my wife's pensions do not amount to the £17000 so if account was changed just to her name would she have up to the £5000 tax free allowance? 

No idea without knowing what her non savings non dividend income is.

And what her Personal Allowance is (£11,310 or £12,570).

Don't forget as long as she isn't a higher rate payer she will have £1,000 taxed at 0%.

And if the account is in her name then it's her money to save or spend as she pleases.

leosayer

If your wife earns £17k then she won't get the full £5,000 starter rate for savings because it tapers away the more you earn above the personal allowance (£12,570).

It's all explained here:
https://www.moneysavingexpert.com/savings/tax-free-savings/

Albermarle

She gets 
£12570 personal tax allowance 
£5000 savings starter rate


So if she had no taxable income she could earn up to £17,570  in interest with no tax.

However she has to deduct any taxable income, such as the State Pension and company pension from that to see how much interest she can get tax free.

Then on top of that she gets £1000 personal tax allowance.

IOWJJBTM2025

When you state you had an unwelcome message from HMRC, I hope that it was not a text message or phone call. HMRC will only write to you. There are a lot of scammers who claim to be HMRC - BEWARE.

where_are_we

You say current tax year but your tax owed will be based on your income for 24-25. HMRC will adjust both your tax codes to facilitate a tax owed repayment. Whilst unwelcome many savers will be getting similar notices from HMRC around this time. 
Going forward for tax year 25-26, it may be beneficial to move savings into your wife`s name . Remember that this will be her money and not yours. Personally, this is what my OH and I do and I am happy to do so.
You do not say what level of income your wife has. You could keep some of the savings to use up your £1000 personal tax allowance.
Has any savings account interest been paid in this tax year 25-26?
For this tax year you need to act quickly because most savings accounts accrue interest daily.
Contact your savings account asap to change ownership of the money.

Albermarle

IOWJJBTM2025 said:

When you state you had an unwelcome message from HMRC, I hope that it was not a text message or phone call. HMRC will only write to you. There are a lot of scammers who claim to be HMRC - BEWARE.

They can also e mail you.

flaneurs_lobster

Albermarle said:

IOWJJBTM2025 said:

When you state you had an unwelcome message from HMRC, I hope that it was not a text message or phone call. HMRC will only write to you. There are a lot of scammers who claim to be HMRC - BEWARE.

They can also e mail you.

They can and do, but I think that's only to direct you to a change or information that you can access on your HMRC account.

SacredStephan

taxavoider1 said:

Hi all, I had an unwelcome message from HMRC saying I had not paid enough tax during current tax year.

Neither you nor HMRC can compute, in November, what your tax liability is for the current tax year or declare that you have not paid enough tax. Was this for 24-25?

Dazed_and_C0nfused

SacredStephan said:

taxavoider1 said:

Hi all, I had an unwelcome message from HMRC saying I had not paid enough tax during current tax year.

Neither you nor HMRC can compute, in November, what your tax liability is for the current tax year or declare that you have not paid enough tax. Was this for 24-25?

It was probably a new tax code for the current tax year.  Which can only ever be a best estimate.