Gross/Net interest?

Albirlaup

I am currently registered to get gross interest on my B.Soc accounts. Due to a windfall I may exceed the limit and need to de-register later in the year.
My monthly income account payments will not exceed the amount, but one annual interest account paying interest on 31 March may tip the scales. If I inform them just prior to this payment so they tax it my tax position will be just about evens: will the BSoc then want tax back on monthly payments already made meaning that I will have to claim it all back again?

tiptoe_mouse

Legally, you are only entitled to register for gross interest if your total income is less than your personal allowance.

From http://www.hmrc.gov.uk/tdsi/example2.htm

Because Annette’s total income is more than her allowances she cannot complete form R85 and must continue to receive her interest with tax taken off. However, Annette can claim back the overpaid tax from HM Revenue & Customs.

tiptoe

dunstonh

Tax is based on your earnings over the tax year. So whether its monthly or yearly or a one off, the amount earned in the tax year is the important bit.

Albirlaup

Thanks folks, what I really wanted to know is what happens if due to change in circumstances you de- register part of the way through a year when you have already received some interest gross.

ctdctd

Albirlaup wrote: »

Thanks folks, what I really wanted to know is what happens if due to change in circumstances you de- register part of the way through a year when you have already received some interest gross.

You should request and complete a tax return so Inland Revenue can get the tax due. The BS won't ask for any interest already paid to be repaid.

tiptoe_mouse

Albirlaup wrote: »

Thanks folks, what I really wanted to know is what happens if due to change in circumstances you de- register part of the way through a year when you have already received some interest gross.

I understand that. However, you wrote:

If I inform them just prior to this payment so they tax it my tax position will be just about evens

I took this to mean that you are aware that you will be a taxpayer this year, but have applied for interest to be paid gross. This is not allowed - you have to tell your bank that you're not eligible for gross interest as soon as you find out you're going to be a taxpayer. When in the tax year you actually receive the income that takes you over the tax-free allowance is irrelevant.

tiptoe