Which tax year do I declare this in?

AP3

I get some money into my current account every month from an NS&I bond. It's usually paid to me on the 5th, but as the 5th is a Sunday, it "came in" on the 2rd (despite this being a bank holiday).

However, looking at the transaction in my current account, it's dated Tues 7th April at midnight.

Presumably the payment doesn't actually "clear" until this date time.

So, which tax year does this count as income for? 25/26 or 26/27?

I have to submit a tax return, so can't rely on whatever the banks report to HMRC.

Thanks!

flaneurs_lobster

If the funds were available to you in your current account on 02/04 (you could actually spend them) then that's income in the current financial year.

AP3

It does seem to be included in the "available" balance. I just don't want to pay tax on it in both years, as it'll actually show as going in on the 7th!

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/81949971#Comment_81949971

That won't happen unless you declare it twice.

It probably won't make any great difference in the grander scheme of things unless you are that close to thresholds or reduction in savings allowance.

If you are not affecting thresholds, I would declare this (2025-26) tax year just incase next tax year income is higher than expected.

I don't suppose HMRC will be taking severe action if you declare the money in the incorrect year.

AP3

It would put me in the higher tax bracket (just). and my savings income allowance (such as this bond payment) would drop from £1k to £500. So if it's doable, I'd rather put it in the 26/27 return. It'd show in my statements on the 7th I'm assuming.

Is there no visibility to the consumer on what the banks submit to HMRC? That's where I can see myself getting tripped up down the line depending on how they report it.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/81950027#Comment_81950027

In that case, next year is the better option for you.

Why not wait until the statement is received?

AP3

Yeah I think I'll do that, and assuming the app shows it actually coming in on the 7th, I'll take my chances,

subjecttocontract

For what it's worth I submit a self assessment every year. I never wait to receive certificates or notices from interest providers. I just keep my own records and put those numbers on the SA. I have absolutely no idea what banks and B.Soc send to HMRC, I think if you submit an SA they just accept the numbers you provide. HMRC have never questioned or written to me suggesting their numbers differ to mine.

Rodders53

I'd say the interest has been paid this tax year and NS&I just sent that payment via snail electrons (aka BACS) to arrive in the next tax year into your account. If it'd been a paper cheque sent by post it would still be dated as such, presumably, and a 25-26 payment…even though it'd take forever to arrive and then pay into your account/clear.

Whether HMRC would agree or care I have no idea.
I can see why you'd not want to pay 40% tax on a £500 Personal Savings Allowance reduction, though (£200)?

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81950087#Comment_81950087

That is the whole concept behind Self Assessment.

You are responsible for completing your tax return and if HMRC don't like or agree with what you have submitted they have certain powers to change or enquire into the return.

How often those powers are used is anyone's guess but we rarely, if ever, get anyone posting on here about being the subject of an investigation (years ago known as a S9A enquiry).

cc123mm456

It's been reported by people that are not in self-assessment that a report of bank interest can be requested from HMRC by phone or messaging. However that wouldn't be available until much later. I believe that banks are allowed up to the end of June after the end of the tax year to report interest to HMRC. Then additional time will be required for HMRC to match the bank data to tax payers records, and I believe the target for that is about the end of September.

It's been reported by those people that the some tax code updates / simple assessments for tax on bank interest have been received later each year for the last couple of years. It could be nearer to the end of the year, or later before the information is ready.

Anyway, you are in self-assessment, so you do not need to request that information from HMRC. Provided that you know that your own records are accurate, and you could provide the backup information in case of enquiries (copies of statements or end of year interest confirmations etc).

In this case, if the NS&I statement shows the interest payment on the 7th April, I think that would probably satisfy that record keeping.

……..

Just in case you need it, there is a way to get back to your £1,000 savings allowance if any late reported income changes your tax position so that you are just slightly in to the higher rate tax band.

The method is to make a gift aid charity contribution. You basic rate band will be extended by 125% of the contribution. So if you git aid say £40, your basic rate band is extended by £50.

You can even do this after the end of the tax year. You can nominate on the self-assessment that a gift aid contribution in the current tax year is treated as applying to the previous year. The only rule is that you must do that on the first submission You can't change it later.