Savings tax interest - confused!

annie1276

Dazed_and_C0nfused said:

annie1276 said:

Dazed_and_C0nfused said:

annie1276 said:

Hopefully this helps? The total taxable income at the top includes the savings interest earned and is minus normal personal allowance of 12,570.

That does clearly show the £500 of your income has been taxed at 0% (the Personal Savings Allowance).

If your interest was £1,066 in total then the tax due for that element is £226.40 (1066 - 500 = 566 x 40%)

The rest must be for some other reason

Thank you - I was hoping not to have to call them but I guess I will need to - wish me luck  

You could just work it out yourself (or with our help) though.  What is different in the calculation compared to what happened during the year and is on your P60.

Thanks, as I said above I just wondered if there was a general principle around tax on savings interest that I was missing, hence asking for help here in case anyone could easily explain it I don’t have a P60 so I think it will be a call to HMRC to clarify as the calculations seem to be saying the only reason tax is due is because of earning savings interest. 

sheramber

Earnings   72711 - 1066=71,645 

37700@ 20%. = 7540

33945 @40% = 13758

total due. 21118

tax paid. 20738

underpaid. 380 + 226 tax due on interest .= 606

annie1276

sheramber said:

Earnings   72711 - 1066=71,645 

37700@ 20%. = 7540

33945 @40% = 13758

total due. 21118

tax paid. 20738

underpaid. 380 + 226 tax due on interest .= 606

Thank you so much for this - so there was an underpayment on tax even before the interest on savings? Sorry if being dim, maths isn’t my strong point and understanding HMRC letters most definitely isn’t  

eskbanker

annie1276 said:

My tax code is definitely correct

What was it, and did it change during the year?  As above, it would appear that there was an underpayment of tax arising from your PAYE income, which could be due to coding issues or payroll system ones, or something else altogether....

Do the figures above correspond with what was on your last payslip of the year (in lieu of the P60)?

annie1276

eskbanker said:

annie1276 said:

My tax code is definitely correct

What was it, and did it change during the year?  As above, it would appear that there was an underpayment of tax arising from your PAYE income, which could be due to coding issues or payroll system ones, or something else altogether....

Do the figures above correspond with what was on your last payslip of the year (in lieu of the P60)?

My tax code didn’t change during the year and is 1347L (adjusted for tax free allowances on professional fees that I have to pay as part of my work). I changed jobs partway through the year (September) and have now checked payslips, my final payslip from my old job shows that I paid £7275.20 for tax there but this figure is £7652.80 on the letter received today … but seems to be saying I did pay that amount of tax during the year?! 

SnowMan

So is the possible issue you haven't been given tax relief on your professional fees in the HMRC assessment, since (13479 - 12570) x 0.4 = 364 which is very close to the £380 difference in tax once the savings interest affect has been excluded (?)

annie1276

SnowMan said:

So is the possible issue you haven't been given tax relief on your professional fees in the HMRC assessment, since (13479 - 12570) x 0.4 = 364 which is very close to the £380 difference in tax once the savings interest affect has been excluded (?)

They are included in the breakdown of income and deductions in the letter received this morning so I don’t think it’s that ….

ivormonee

As mentioned above, the difference is due to an underpayment of tax arising from your PAYE income on your first employment, to September 2024.

I've set out the detailed calculation here, where I've added in the allowances to show that they are included in the HMRC figures, and where you can see that the shortfall of £606 is made up of the underpayment of employment tax (can happen when you leave a job during the tax year), which is £379.60, plus the tax due on your savings income, which is £226.40.

Full Calc.
		Income	Tax
Gross Income		85,115.03
SPA (Adj.)		13,470.00
Taxable Inc.		71,645.03
Basic Rate		37,700.00	7,540.00
Higher Rate		33,945.03	13,578.00
Savings		1,066.00
PA		500.00
Taxable Savings		566.00	226.40
Tax Total			21,344.40
Tax Paid			20,738.40
Tax Due			606.00
Made up of:
Savings Tax			226.40
Non-savings Tax			379.60
Tax Deducted to Sept.			7,275.20
Tax Due on empl. to Sept.			7,652.80
Rounding			2.00
Tax underpaid on empl. to Sept.			379.60

Hope this helps!

annie1276

ivormonee said:

As mentioned above, the difference is due to an underpayment of tax arising from your PAYE income on your first employment, to September 2024.

I've set out the detailed calculation here, where I've added in the allowances to show that they are included in the HMRC figures, and where you can see that the shortfall of £606 is made up of the underpayment of employment tax (can happen when you leave a job during the tax year), which is £379.60, plus the tax due on your savings income, which is £226.40.

Full Calc.
		Income	Tax
Gross Income		85,115.03
SPA (Adj.)		13,470.00
Taxable Inc.		71,645.03
Basic Rate		37,700.00	7,540.00
Higher Rate		33,945.03	13,578.00
Savings		1,066.00
PA		500.00
Taxable Savings		566.00	226.40
Tax Total			21,344.40
Tax Paid			20,738.40
Tax Due			606.00
Made up of:
Savings Tax			226.40
Non-savings Tax			379.60
Tax Deducted to Sept.			7,275.20
Tax Due on empl. to Sept.			7,652.80
Rounding			2.00
Tax underpaid on empl. to Sept.			379.60

Hope this helps!

You are an absolute superstar - thank you so very much, I’m honestly so grateful. Do let me know if you would like a gig as my tax adviser, obviously only after I’ve repaid my dues to HMRC Thanks heaps. 

ivormonee

annie1276 said:

You are an absolute superstar - thank you so very much, I’m honestly so grateful. Do let me know if you would like a gig as my tax adviser, obviously only after I’ve repaid my dues to HMRC Thanks heaps. 

Pleasure! Just to make sure - would you just like to check your HMRC records to verify that the total income shown, before any allowances are taken off, is £86,181? If it isn't, we would need to review the situation!