Tax on Interest

ChrisMC_2 · 21 February 2019 at 8:09PM

Hi

The HMRC has sent me a revised tax code, saying I paid too little tax last year. This is due to untaxed interest. For me, this can only be down to savings, which is fine as I will owe them. The problem I have is even if I take all my savings, including ISAs (I know I shouldn't be taxed on these), and use the highest interest rate on my accounts I'm nowhere near the interest figure they are quoting. My money situation is quite simple, so I'm reasonably confident that I'm right. Ideally I'd like them to provide a breakdown of the untaxed interest figure they have. Can I do that or do I need to do something else? Any advice would be welcome.

Thank you

Chris

Dazed_and_confused · 21 February 2019 at 8:53PM

You should be able to check it in five minutes tonight by looking at your Personal Tax Account on gov.uk.

ChrisMC_2 · 21 February 2019 at 9:02PM

Thanks D&C. I did wonder about that, so I'll get an account set up and take a look. Thanks again

Dazed_and_confused · 22 February 2019 at 3:18AM

Can you supply a breakdown of the tax code?

Is it definitely the interest amount you are looking at on your tax code or a reduction to collect the tax due?

This would be much higher due to how PAYE works i.e. £250 owed would typically result in a reduction of £1,250 for a basic rate payer.

A reduction of £1,250 means your employer would collect an additional £250 in tax (£1,250 x 20%).

ChrisMC_2 · 22 February 2019 at 3:36PM

Hi

Thanks for checking, really appreciated. The figure I'm seeing is definitely what they believe I earned from savings interest. They add this to my taxable income (just salary in my case) and then start doing the usual tax calculation to work out how much tax I should have paid compared to what I did pay (via my P60). Interestingly I picked up another thread [RG2015, 8th Jan 19 at 4:24 PM] which suggests the HMRC have duplicated some people's entries and included ISAs. I will check though.

Thanks for your help and diligence

Chris

badmemory · 22 February 2019 at 5:14PM

ChrisMC wrote: »

Interestingly I picked up another thread [RG2015, 8th Jan 19 at 4:24 PM] which suggests the HMRC have duplicated some people's entries and included ISAs. I will check though.

Or frankly just plain got it wrong. They had my interest as just a third of what it should have been. There are going to be a lot of people caught out by this if they don't check HMRCs figures. What worries me are the penalties they are going to be charging people who have been foolish enough to take HMRCs word for the too low figures. HMRC will not accept any responsibility for their errors & will blame all the banks or individuals.

The way they are going HMRC are going to be "earning" more in penalties than in tax.

Dazed_and_confused · 22 February 2019 at 5:26PM

What worries me are the penalties they are going to be charging people who have been foolish enough to take HMRCs word for the too low figures.

In what situation do you think penalties will be (or can be) charged?

Tax on Interest

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