PAYE and untaxed interest

littlemoney

In 2025/26 my savings interest was more that what was estimated on my tax code notice. I will be paying the extra tax via the self assessment calculation plus payments on account for 2026/27.

For 2026/27 HMRC used the same amount of expected interest and I anticipate it may be an unestimate again.

Do this mean it is likely HMRC will change my tax code to take more tax from PAYE in 2027/28 as for 2 consecutive years they have underestimated the amount of savings interest?

Thank you for reading.

fuzzzzy

Sorry I don't know the answer to your question.

The first year I did self assessment I found it really confusing how tax from PAYE and self assessment interacted, and I still don't know how it all works.

Now I always tick the box on the self assessment form to say that I do not want tax for anything other than employment earnings / pension collected via the current year's tax code. So I now always have a standard tax code applied for my pension and I pay the rest of tax owed for savings interest through self assessment. I find it much easier to get my head around it that way.

DRS1

If 80% or more of your tax is collected via PAYE then you would not have to pay the payments on account.

GrubbyGirl_2

This is what I do. As soon as I get my final annual savings interest statements around May time I give HMRC a call to update the previous years amounts. At the same time I give them a guestimate as to what my interest will be in the current year (as it's usually more) this then triggers a tax code change so any tax is then spread over the year.

qsk

https://forums.moneysavingexpert.com/discussion/comment/82135554#Comment_82135554

When did your tax code change? I submitted my SA two months ago and still no tax code update. I actually phoned them in an attempt to update it but they say it is an automated process.

GrubbyGirl_2

https://forums.moneysavingexpert.com/discussion/comment/82135832#Comment_82135832

It changed in my account pretty much straight away though took about 3 weeks to get the letter. I did it about 3 weeks before my pay day and the new code was applied already. This is PAYE though not SA

molerat

Both mine is and MrsM's accounts show updated interest for this year "based on information from previous". Incorrectly high so have adjusted to an accurate estimate. No sign of an adjustment for last year where I do owe tax though nor an adjustment for this year's estimate.

sheramber

https://forums.moneysavingexpert.com/discussion/comment/82135995#Comment_82135995

Isubmitted correct details in April and received my repayment and amended code three weeks ago.

littlemoney

I joined self self assessment when in April 2026 I was asked to do one for 2024/25 which I paid and accountant to do. Now doing 2025/26 myself. Steep learning curve helped by everyone here.

I'm guessing it will take a little longer for everything to get sorted as not yet submitted 2025/26. Been going back and amending based on comments here

Fatboydel888

You have to be careful with this as HMRC "assumes" the same level of interest as the current tax year for the next tax year, I moved a sum of money from my savings account into an ISA to avoid paying tax on interest over the threshold, but HMRC assumed the same amount was due the following year.

Still waiting to see if the have got it right for last year as it take them forever to do the previous years final calculation.