"who does self assessment"
Flugelhorn
Posts: 5,573 Forumite
in Cutting tax
OH got about 1.5K interest this year, contacted HMRC who reluctantly sent a tax form, new code / calculation came back with message to say you don't need to do S-A next year
Amount of interest likely to change, we checked the "who needs to do S-A return" thingy on the HMRC website and they only seemed bothered if income from savings interest was > 2.5K.
I thought that you had to pay tax on interest over 1K - where am I going wrong in this?
Amount of interest likely to change, we checked the "who needs to do S-A return" thingy on the HMRC website and they only seemed bothered if income from savings interest was > 2.5K.
I thought that you had to pay tax on interest over 1K - where am I going wrong in this?
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Flugelhorn wrote: »I thought that you had to pay tax on interest over 1K - where am I going wrong in this?
I'm not an expert, but I think you're equating the fact that tax may be owed with the need to do a full self assessment. In many cases there'll be a less complicated way of gonig about it - I seem to recall there used to be a much shorter form where you could just declare interest and dividends without filling in the full self assessment.
And that's assuming that HMRC aren't now automatically made aware of it by the savings institutions in question and adjust your tax code accordingly ?0 -
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You generally only need to do a tax return for savings interest if you earn more than 10,000 from it or (iirc) if you don't have a paye source to pay any tax due on it.
The 2.5k you're referencing I believe refers to interest other than savings. Might be mistaken (theres a lot of different thresholds involved with tax returns) but i'm relatively certain.You keep using that word. I do not think it means what you think it means - Inigo Montoya, The Princess Bride0 -
unholyangel wrote: »You generally only need to do a tax return for savings interest if you earn more than 10,000 from it or (iirc) if you don't have a paye source to pay any tax due on it.
The 2.5k you're referencing I believe refers to interest other than savings. Might be mistaken (theres a lot of different thresholds involved with tax returns) but i'm relatively certain.
There were 2 questions - do you ger > 10K to which answer was no and then there was this:
- so presumed that was the threshold for doing S-A.£2,500 or more in interest, tips, commission or cash in hand payments
If the only income is occupational pension (standard rate tax payer) and the savings are all NS&I, does NS&I let HMRC know?
I personally have to do S-A and have done for years - OH hasn't paid tax for 12 years and definitely hasn't got into doing it online :rotfl::rotfl: so he'll be back to writing to them again next year0 -
Flugelhorn wrote: »There were 2 questions - do you ger > 10K to which answer was no and then there was this:
- so presumed that was the threshold for doing S-A.
If the only income is occupational pension (standard rate tax payer) and the savings are all NS&I, does NS&I let HMRC know?
I personally have to do S-A and have done for years - OH hasn't paid tax for 12 years and definitely hasn't got into doing it online :rotfl::rotfl: so he'll be back to writing to them again next year
The banks all report the interest to HMRC but have been known to get it wrong - which isn't surprising, there's always a higher degree of mistakes in the first few years after a policy change as people get familiar with a new way of doing things.
So if the amount they declare affects your tax, always double check it.You keep using that word. I do not think it means what you think it means - Inigo Montoya, The Princess Bride0 -
Flugelhorn wrote: »I thought that you had to pay tax on interest over 1K - where am I going wrong in this?
Although interest over £1,000 is taxable you will only have to pay tax on it if the taxable interest added to your other taxable income takes you over your basic tax free allowance. Remember also that interest from ISAs is ignored altogether and does not count towards the £1,000.
So if you have interest of £1,500 only £500 is taxable. If your other income is £12,000 or less then the total income does not exceed £12,500 and there is no tax to pay.Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.0 -
Although interest over £1,000 is taxable you will only have to pay tax on it if the taxable interest added to your other taxable income takes you over your basic tax free allowance. Remember also that interest from ISAs is ignored altogether and does not count towards the £1,000.
So if you have interest of £1,500 only £500 is taxable. If your other income is £12,000 or less then the total income does not exceed £12,500 and there is no tax to pay.
This is a common misconception- all interest (other than exempt sources such as ISAs is taxable). Some of it is only taxed at 0% but it’s still taxable. Not taxable, tax-free, exempt etc have special meanings, which is different to taxable at 0%.
So in the above £1,500 is taxable but depending on other sources some of it (either £0, £500 or £1,000) is taxable at 0%. This means the interest itself can be included in the calculation of the amount of interest that you pay tax at 0% on.0 -
HMRC will make a guess at the amount of interest & it could be 20% of what it should be or 10 times what it should be & adjust any code accordingly. YOU WILL NEED TO CHECK! In these years of ever decreasing interest rates HMRC seem to believe that interest paid will actually increase significantly.0
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