Tax Refund Process

JDR2018 · 9 August 2018 at 1:20AM

I have some questions regarding HMRC and the process of tax refunds - I hope someone can offer some advice or share their experience.

My situation is as follows:

During the 2017/18 tax year I was taxed under PAYE with the 'standard' tax code 1150L. I left my job just over half way through the tax year and afterwards supported myself solely from savings (I had no further income from work or benefits). My taxable income prior to leaving work was around £18K.

In June of this year I contacted HMRC with the above information to ask them whether I might be due a tax refund for 2017/18.

In July I received a letter asking for details of any bank or building society interest received in the 2017/18 tax year. I totalled up the values from the dozen or so accounts I held during the year and replied with a summary of the interest in three categories: Non-ISA (742.54), ISA (1623.07), NSI RPI Index Linked Certificates (308.12). None of this was taxable as far as I am aware.

I have now received a further letter asking for the sort codes and account numbers for the accounts.

I'm wondering:

1. Is it usual to be asked for sort codes and account numbers of bank / building society accounts when claiming a tax refund?

2. Do banks and building societies no longer provide information regarding interest payments to HMRC (did that ceased with the introduction of the personal allowance for savings)?

3. What will HMRC do with this information? Assuming they wish to verify the figures will the next letter I receive be one asking for statements for all my accounts; or will they contact the relevant institutions directly - discover I've given the correct information - and proceed with assessing my refund?

4. Should I need to include ISA and NSI accounts in my reply as these are not taxed so have no impact on any tax refund? Or do they?

5. Is there any way to submit this information online through my "Personal Tax Account"?

Hope the above makes sense

Dazed_and_confused · 9 August 2018 at 6:41AM

Non ISA interest is virtually always taxable, why do you think yours isn't?
NB. The NSI RPI index linked certificates appear to be not taxable but you would have to check your paperwork to be certain.

I wouldn't tell them about genuinely non taxable interest unless they specifically asked for it.

1. Didn't used to be but maybe is required nowadays

2. Yes, the rules banks need to follow are on gov.uk and they have a deadline to do so (cannot remember what this is but presumably they get a while to collate it all and pass it on). Maybe you have applied before that information is available?
Also, the so called "Personal Savings Allowance" has not changed whether interest is taxable or not, all interest previously taxable remains taxable post April 2016.

3. I would guess they will then have sufficient information to calculate your tax position for 2017:18. If the data they eventually get from the banks differs then you might need a revised calculation.

4. ISA no but NSI depends on the account, some are taxable and others aren't. Whatever you do make it crystal clear why you are omitting some information i.e. you originally reported ISA interest in error so the account info isn't relevant.

5. May well be but I havent tried it myself.

Based on your op there is probably £742 interest you will be taxed on but the tax rate will be 0%

Lorian · 9 August 2018 at 6:45AM

You have to tell them about the 742.54

They will apply the personal savings allowance as appropriate.

Dazed_and_confused · 9 August 2018 at 6:56AM

Which is to tax it at 0%.

The Personal Savings Allowance isn't applicable to lower earners so if the op remains out of work then it won't apply in 2018:19 and no tax is likely to be payable because of either the normal Personal Allowance or the savings starter rate of tax (also 0%). Both of which have to be utilised before the Personal Savings Allowance rate band can be used.

JDR2018 · 22 September 2018 at 1:05AM

Thanks to Dazed and Confused and Lorian for your replies.

Just wanted to post a brief update.

After further enquiries by phone I was advised that only the taxable accounts were actually needed - I didn't have to provide the ISA and NSI ones - so just gave the breakdown for the 742.54. Now waiting for a P800.

JDR2018 · 3 October 2018 at 3:27PM

Another update.

A few days ago I logged in to my Personal Tax Account and the refund was showing but the value was about £200 less than I was expecting. The paper copy of the P800 arrived today and confirmed the calculation had used an Untaxed Interest figure of just over £2000 rather than the £742.54 I provided. On the phone (after being cut-off twice while on hold...) we found it was due to an erroneous interest payment of about £1200 against my name. So I got that removed and now await a revised P800.

On the subject of banks and building societies providing interest figures to HMRC (which was the second of my original questions) I'll just add a few notes in case anyone comes across this thread looking for information on this topic.

In a previous post Dazed and Confused mentioned that the rules banks and building societies use for reporting interest are on the gov.uk web site. They are – in the document "Bank, Building Society Interest (BBSI) Returns 2017/18". (Unfortunately I can’t post a link to this but if you put the title or file name bbsi_guidance_note_2017_18.pdf into a search engine you should be able to find it).

According to this document, for the 2017/18 tax year, in general HMRC expected to send out requests to banks and building societies in February 2018 to be returned no later than the end of June 2018.

I emailed several of the institutions that I have accounts with to ask whether they report interest to HMRC. Three replied with answers to a question I hadn't asked (stock answers?) and one denied any reporting took place.

While on the phone to HMRC today I took the opportunity to query why I was reporting interest figures that my banks and building societies should already have provided. I was told that banks and building societies used to provide this information but stopped doing so (when the personal savings allowance was introduced???) but the process was going to start again soon.

If anyone can confirm, contradict or supplement the above please do…

Tax Refund Process

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