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New rate of tax on interest from April 2027
Comments
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Yes. If you look at questions 2 and 3 on page TR4 of the paper return on gov.uk these will be quite important for you.
2 is about how the tax you owe from that return is collected.
3 is about keeping your tax code upto date using the information from that return. It seems pointless asking HMRC to remove it now if you are going to tell them to put it back in when you file your return.
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Ok thanks, so if I put a cross in box 2 and 3 under 'If you have not paid enough tax' (they were on page TR6 on the SA100 2025 form I opened for reference) from now on I will end up just making a payment on account in January and July and then a balancing payment due by 31 January the following year, and as I only have a work pension and savings interest as income I should just get tax applied to my pension through my tax code.
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Just a bit confused. If I earn (and paid) £6000 interest in 2026/2027 and report it in my self assessment tax return for 2026/2027 which will be filed in 2027/2028 will I pay tax at 20% as the interest was earned and paid in 2026/2027 or at 22% as it will be reported in 2027/2028?
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You pay tax at the rate that was current at the time you earned the interest. So if the rate was 20% when you revived the interst payments then thats what you pay, no matter when it is actually paid.
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Did you mean 'received' rather than 'revived', and if so, how do you see that as different from when interest is actually paid?
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Think he means when the tax is paid not when the interest is paid.
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Sorry - poor typing. I meant recieved - or perhaps betterly put - paid. So, if you got paid interest on the savings in the tax year 2025-26 then you pay tax on it at the relevant rate for that year i.e. 20% no matter when you pay it. Normally (PAYE) you would pay the tax during the following year. As a self assessment it would be paid in 2027.
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You are overthinking this.
Each Self Assessment calculation will apply the rates relevant for the tax year the tax return is for.
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If your point is that the number who feel/are aware of the change is likely lower than the number who are actually affected by it than that doesn't really imbue the policy with moral clarity. One would (cynically perhaps!) argue this is the whole point these suite of changes were made - designed to make it complicated, make it technical, make it fiddly, make it sound like it applies to some other person, at some distant point in the future, so most people will ignore it. Just another layer of detail in our bloated and overcomplicated tax system which even politicians and HMRC admit they can't understand and struggle to follow.
Reducing the personal savings allowance by £10 might generate far more tax income (and be far easier to implement!) but that's a noticeable change that will affect most people very obviously in their monthly payslip and therefore will generate bad print headlines and make the 6pm News. Whereas a 2% increase on 'higher rate' taxpayer savings interest income is niche and fiddly enough to stay away from attention and airtime.
Given HMRC's previous income tax calculator was wrong for several months one wonders how long it will take them to rebuild it for all these newer changes, if they even bother at all.
And the investment platforms are holding their advertisement budgets for this time next year when they can gleefully tell all under 65s that they need to use their S&S ISA platforms rather than the Cash ISA…who lobbied for that policy I wonder!
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Not overthinking just asking a sensible and relevant question. Should have realised would not get the same in return
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