Do you declare savings interest if it is under the tax free allowance?

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cjv
cjv Posts: 513 Forumite
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in Cutting tax
Just browsing over the tax return forms on my HMRC account to get an idea of what info I need when I come to submit it.

Do we need to declare minimal amounts of interest from our personal bank/savings accounts if it is under the £1000 tax free allowance?

Many thanks

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  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
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    Genuinely "tax free" interest such as from an ISA does not need to be entered on a tax return.

    All other interest remains taxable and should be declared just as it always has been (other than probably being declared as untaxed interest rather than taxed interest).

    If you have used all of your Personal Allowance then you will be taxed on the interest although it may be at either the starter savings rate (0%) or Personal Savings Allowance rate which is also 0%.
  • cjv
    cjv Posts: 513 Forumite
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    Thanks for that.

    The amounts are tiny, a few pounds per month from current and savings accounts and I was hoping I could get away with not having to go hunting through all my statements.

    I will be sure to declare it.
  • jimmo
    jimmo Posts: 2,281 Forumite
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    If you have to complete a Tax Return you have to declare all of your income so I am afraid you will need to go through your statements. Just in case it matters to you, can I point out that Rewards and suchlike are not necessarily interest. For example I have a Halifax Reward current account which gives me £3 per month. That is not interest, its classed as an "annual payment" for tax purposes and counts as a gross amount of £3.75 with tax of £0.75 deducted at source. Click on "More about the £3 reward" in this link.
    https://www.halifax.co.uk/bankaccounts/current-accounts/reward-current-account/
    Here is the HMRC view.
    https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim8020

    As the Rewards are not interest the income does not qualify as savings income and there is no special tax treatment. For basic rate taxpayers all this makes no practical tax difference. Non taxpayers can claim repayment of the tax deducted at source and higher rate taxpayers will have a little extra to pay but, as you have to complete SA Returns, you need to get this right.
  • cjv
    cjv Posts: 513 Forumite
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    edited 8 April 2018 at 6:32PM
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    jimmo wrote: »
    If you have to complete a Tax Return you have to declare all of your income so I am afraid you will need to go through your statements. Just in case it matters to you, can I point out that Rewards and suchlike are not necessarily interest. For example I have a Halifax Reward current account which gives me £3 per month. That is not interest, its classed as an "annual payment" for tax purposes and counts as a gross amount of £3.75 with tax of £0.75 deducted at source. Click on "More about the £3 reward" in this link.
    https://www.halifax.co.uk/bankaccounts/current-accounts/reward-current-account/
    Here is the HMRC view.
    https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim8020

    As the Rewards are not interest the income does not qualify as savings income and there is no special tax treatment. For basic rate taxpayers all this makes no practical tax difference. Non taxpayers can claim repayment of the tax deducted at source and higher rate taxpayers will have a little extra to pay but, as you have to complete SA Returns, you need to get this right.

    Thanks jimmo, that's very helpful as I was planning to include the monthly rewards from Halifax, TSB and COOP due to all the account switching I done last tax year!

    I think it will just be easier to wait until all my annual statements showing interest arrive from my banks. I think i binned the ones that I received from the accounts I closed though! I'm an idiot.
  • polymaff
    polymaff Posts: 3,904 Forumite
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    edited 8 April 2018 at 6:57PM
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    cjv wrote: »
    Thanks for that.

    The amounts are tiny, a few pounds per month from current and savings accounts and I was hoping I could get away with not having to go hunting through all my statements.

    You can. You download, or request, a certificate of interest paid covering 06/04/17 to 05/04/18.

    The newer banks offer this precise download. Other dinosaur banks - e.g. HSBC - have to be instructed to "supply certificates of interest paid covering the entire tax year 2017 to 2018 for all my accounts, single or joint, held with you during that period".

    Should you get into difficulties it will be these certificates which HMRC will want to see.

    NOTE: These are NOT the same as the annual statements.
  • cjv
    cjv Posts: 513 Forumite
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    Perfect! thank you, I will contact all the banks that have paid interest over the tax year including the accounts I have closed and request the certificates.
  • polymaff
    polymaff Posts: 3,904 Forumite
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    cjv wrote: »
    Perfect! thank you, I will contact all the banks that have paid interest over the tax year including the accounts I have closed and request the certificates.

    No, ask for them ALL.

    It is also important to be able to prove that some accounts have NOT accrued any interest. :)
  • RG2015
    RG2015 Posts: 5,904 Forumite
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    polymaff wrote: »
    No, ask for them ALL.

    It is also important to be able to prove that some accounts have NOT accrued any interest. :)
    Yes, it is important. NatWest are really annoying because if you close an account they remove it and all its history from online banking.

    I know that I can request a statement but it is just more hassle. Virgin Money on the other hand retain all transaction history online for closed accounts.

    Just to be safe, I have not closed any accounts recently and if I did I would download my statements and recent year’s interest certificates. I wouldn’t want to cause problems just because I had been careless!
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