Fixed Rate non-ISA Bonds, straddling 2 tax years: new 22 per cent tax rate on interest

masonic

You may prefer self assessment, which puts the onus on you to track and report the income, but removes all of the tax coding complexity and HMRC errors.

Annemos

masonic said:

You may prefer self assessment, which puts the onus on you to track and report the income, but removes all of the tax coding complexity and HMRC errors.

Thank you very much masonic. Are you able to give any more details on this:   


If one does ask to be put back onto self-assessment, does HMRC definitely stop doing any notice of Coding adjustments for Interest Income?  

(I presume they still do one for the state pension adjustment, which is fine?)

I just have:     (I am a Basic Rate Taxpayer)

1   State Pension

2   Private Pension (Notice of Coding adjustments get put through here. Currently usually only for the State Pension, because those 2-year Bonds have not been there yet.)

But they did also have a go at doing another NOC adjustment last year 24/25, based on Interest income from about 2 years before. That's how I found out about the system. 

I had already shifted all that into ISA's, as the Interest rates started to rise. So they should not have tried to tax anything. I tried to ask for the removal on-line and on the phone, it got into a mess, and it ended up with me issuing a complaint to get it removed! 

The good thing about that was, the Complaint Handler sent me a full actual assessment for 24/25 and I could then see how they actually pick up one's state pension timing. That was something I had always been vague on. Pension goes up in May 2024: they take 13 X the new uplifted amounts going forward). 

3 Then there will be interest income from the one-year Bonds approx. 2500 pounds annually

4 And interest from the two-year Bonds. 1600 pounds annually which is 3,200 pounds if taxed in one go at the end of 2 years. 

Many thanks to anyone who can help illuminate what they would do. 

masonic

Annemos said:

masonic said:

You may prefer self assessment, which puts the onus on you to track and report the income, but removes all of the tax coding complexity and HMRC errors.

Thank you very much masonic. Are you able to give any more details on this:   
If one does ask to be put back onto self-assessment, does HMRC definitely stop doing any notice of Coding adjustments for Interest Income?  
(I presume they still do one for the state pension adjustment, which is fine?)

I can't speak to the state pension adjustment as I am some way off receiving that, but they accept my interest figures (which have been different than those sent to them by banks and building societies for several tax years) and do not make an adjustment to my tax code, since I've asked them not to on the form, and instead pay what is owed online before the end of January.

There has been some discussion about registering for self assessment here: https://forums.moneysavingexpert.com/discussion/comment/81798300/#Comment_81798300

Dazed_and_C0nfused

Annemos said:

masonic said:

You may prefer self assessment, which puts the onus on you to track and report the income, but removes all of the tax coding complexity and HMRC errors.

Thank you very much masonic. Are you able to give any more details on this:   

If one does ask to be put back onto self-assessment, does HMRC definitely stop doing any notice of Coding adjustments for Interest Income?  

(I presume they still do one for the state pension adjustment, which is fine?)

I just have:     (I am a Basic Rate Taxpayer)

1   State Pension

2   Private Pension (Notice of Coding adjustments get put through here. Currently usually only for the State Pension, because those 2-year Bonds have not been there yet.)

But they did also have a go at doing another NOC adjustment last year 24/25, based on Interest income from about 2 years before. That's how I found out about the system. 

I had already shifted all that into ISA's, as the Interest rates started to rise. So they should not have tried to tax anything. I tried to ask for the removal on-line and on the phone, it got into a mess, and it ended up with me issuing a complaint to get it removed! 

The good thing about that was, the Complaint Handler sent me a full actual assessment for 24/25 and I could then see how they actually pick up one's state pension timing. That was something I had always been vague on. Pension goes up in May 2024: they take 13 X the new uplifted amounts going forward). 

3 Then there will be interest income from the one-year Bonds approx. 2500 pounds annually

4 And interest from the two-year Bonds. 1600 pounds annually which is 3,200 pounds if taxed in one go at the end of 2 years. 

Many thanks to anyone who can help illuminate what they would do. 

It all depends on how you complete the Self Assessment return.

Look at the paper version of the SA100 on gov.uk to see the relevant question.