Self Certification - £10k Interest Threshold

Bd26ww

My finances have always been simple, and since retiring my only income is from a Civil Service pension and some interest from savings held in bank accounts. HMRC send me 2 letters a year stating what tax I need to pay on my pension and interest and adjust my pension’s tax code accordingly.

By chance a friend mentioned that if my interest on savings exceeds £10,000 in a year I need to submit a tax return. HMRC’s web site confirms this, but only if you use their online form to assess whether you need to self-certify.

This seems to be a little-known rule, and where HMRC know all my pension and savings income do I really need to duplicate the process once my taxable savings income exceeds £10,000/annum?

I ask this as I have a lack of confidence in HMRC and a dread of ever needing to submit a self-certified tax return following my previous stressful attempt to cancel my mother’s need to self-certify which took upwards of 4 months and many phone calls.

subjecttocontract

Thats the rules, £10K or more in savings interest = self assessment. I don't believe it's optional.

flaneurs_lobster

Need to use the correct terms - you are referring to self-assessment. Self-certification is used in all sorts of contexts but not this one.

kermchem

If you are receiving £10k per year in interest from taxable savings then that implies about £200k in savings at 5% interest. Suggest that you put £20k into an ISA and same again after April 6th.
If you are counting interest in ISAs in your income then the whole point is that HMRC has no call on ISA interest.

Albermarle

There has been some suggestion ( some time ago) that this £10K limit would be increased, but nothing has changed so far.

OP - How far above £10K is the interest involved? If it is only above by a small amount, and it maybe like that for only a year, ( whilst you maybe ship money into ISAs premium bonds etc) then probably HMRC would not clap you in irons if you avoided self assessment. ( do not quote me on that though !)

DRS1

When HMRC write to you saying what tax you owe on your interest and pension do they actually get the interest figure right?

If they do and if they will therefore see you getting more than £10k of taxable interest you can expect they will write to you saying you need to do self assessment.

But if those are you only sources of income it is going to be a very simple exercise.

eskbanker

By chance a friend mentioned that if my interest on savings exceeds £10,000 in a year I need to submit a tax return. HMRC’s web site confirms this, but only if you use their online form to assess whether you need to self-certify.

No, the rule is stated on the savings interest page without needing to complete the checker, although that remains an options for those who wish to use it.

If your savings interest is more than £10,000  

You need tell HMRC how much interest you earned on a Self Assessment tax return. If your bank or building society tells HMRC that you have more than £10,000 in savings interest, HMRC will send you a notice to file a tax return.

If you do not already complete a Self Assessment tax return you’ll need to register. Check if you need to send a tax return if you’re not sure.

https://www.gov.uk/apply-tax-free-interest-on-savings/how-you-pay-tax-on-savings-interest

Note that this confirms the above poster's comment that HMRC will tell you to self-assess if they're made aware of you exceeding the limit, although the wording in your OP suggests that you may not have actually done so yet anyway ("where HMRC know all my pension and savings income do I really need to duplicate the process once my taxable savings income exceeds £10,000/annum?")?