Tax to be paid in excess of £1000 tax allowance.

I can only tell you what someone at the tax office told me when I rang once about DH’s tax code number.

She said they couldn’t tell if savings were in joint or sole accounts, she took note of what I told her, which accounts were which.

It seemed that the banks/building societies just forwarded the interest amounts without designating if they were sole or joint.

If anyone knows different, I would be interested to hear.

Our tax liabilities on savings are for each of us, as we have the savings in separate accounts, for us it makes tax sense.
I once asked the bank, some years ago, about tax on a joint account and they said it depended on whose name was first on the account. Thus DH was deemed ‘in charge’ of the account.
Maybe it’s the same now, but might have changed.

Firstly, I think it depends why you have to complete a tax return in the first place.
I did my mine (I have a rental house, so I’m classed for self assessment) before Xmas and it came back as expected, but there’s a new system in place, known as Advance Payment, so as well as what I thought I’d owe, I’ve to pay a further 50% of that figure by the end of this month. An example would be, if I owe £1K, I’ve to pay £1500 in January and a further £500 in July. The advance amount is based on what my income is expected to be for 24/25.

The theory is that I’ve had the income from 23/24 and would normally not pay any tax until 25, whereas those receiving pensions/other income are paying their tax as they receive their income.

Does that make sense? Is your demand literally half as much again as you were expecting?
Look up HMRC Advance Payments - it explained it all to me.

To be clear, is this tax demand purely on interest from savings? Or, could some of it be because his other income has risen, if his State Pension now exceeds the Personal Allowance?
Has HMRC sent a breakdown of the figures?
I take it your DH does not do self assessment? So this will be based on figures HMRC have received from employers, pension funds, DWP for State Pension, banks and building societies etc.
If the extra tax is based on interest, then he needs to inform HMRC that these are joint accounts, and get the interest allocated appropriately.

Thank you. We don’t have any income other than savings and state pensions and modest private pensions which are already taxed. The breakdown states it is savings. I am in the same situation but have not received a demand of yet. The problem is that we have tax statements from one building society but my dh needs to know what we had from the Nationwide bond in 23 to 24 which was changed from Virgin to them in the Spring of that year. They said it would take at least ten days before we could receive this. This doesn’t surprise me as we have always found that they are the LEAST communicative of any building society we have ever been associated with.

Just as well that you don’t have to do Self Assessment as the deadline is 31 January ( online), paper version is 31 October).
HMRC can adjust it in the light of updated information.
That sound pretty inefficient of Virgin/ Nationwide not to have sent the information on 2023/ 2024 long ago. Ten days to respond to a request now is par for the course.

Do you have a gov.uk account ? You can go online to see your tax information and update any change of income there.
I had to do this when HMRC assumed wrongly that a big payment from my late husband’s pension would recur every month, but it got sorted once they knew.
If you don’t do this online you can try ringing them, try at 8 am and you might get through more quickly.

Just a thought, are you both using your full ISA allowance? It will shelter interest on £20k pa from tax.
Or put money into individual savings accounts. accounts. ISA cannot be joint.

The £1000 you are talking about is the Personal Savings Allowance (PSA) - only £500 for higher rate taxpayers.

Interest on savings in excess of this is taxed at the person’s marginal (highest) rate.

Any tax free savings e.g. ISA is excluded from this.

There is also a starting rate of £,5000 interest tax free for people whose income is less than £17,570.

www.gov.uk/apply-tax-free-interest-on-savings

Couples each have their own PSA and starting rate depending on their income and marginal rate.

What confuses me about your post is that you say, I also have accounts in my name which are again in joint accounts. Are you just talking about the lead name or accounts held in one name (but where income is shared) in which case it wouldn't classed as a joint account.

The tax legislation is clear.

Where interest arises on an account held in the joint names of spouses or civil partners, each will normally be taxable on half of the interest:

www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2420

A joint account is one where two people are named on the account and can manage it, so both joint account holders can withdraw or deposit money and make payments.

www.moneysavingexpert.com/banking/best-joint-bank-savings-accounts/

Tax payable by the deadline 31 January 2025 is for income paid during the period 6 April 2023 - 5 April 2024.

Nationwide issue a statement each tax year listing the interest paid on each account held with them. You can access this from your online banking app. Left hand side of screen - see Interest and tax paid.

Interest on bonds is usually paid annually. If you are being told the interest paid is not yet available then I suspect it falls into 2024/25 so any tax won't be payable until 31 January 2026.

Hello Flittermouse. Thank you. Our savings accounts are in joint names. So two different lead accounts but both having the same access to withdrawals. Our letter was dated the 18th December but didn’t receive it to the 7th January. It says we have 60 days to dispute it. I have now written to question the situation and notify the fact that we have joint accounts but my allowance isn’t shown. I will have to send this recorded delivery today. Thank you.

Ps the tax is from 23 to 24.

Yes, if you believe that income from interest which should be assessed 50:50 has all been assessed on your husband then you need to appeal and show evidence that the account is joint.

Have you found the online interest statement from Nationwide? Bond income should be listed under non-tax free accounts.

I’ve attached an extract from my own Nationwide interest and tax paid statement for illustration with numbers blacked out. It shows all accounts in existence at the time the statement was generated. You will see I have an 18 month FROB - fixed rate online bond - showing £0.00 interest. That’s because it was a new bond. I didn't invest until May 2024 but it still shows on the 2023/24 statement even though the interest won’t be paid until November 2025.

If you think that you will have ongoing tax liability (one or both of you) then it would be easier to manage via online tax accounts. You just need to set up a Gateway accounts online and follow the instructions.

I’m in a similar situation to you, pensions and taxable interest (having maxed out ISAs) so I make an annual self-asssement return. I filed my 2023-24 return in November 2024. Agreement came back swiftly with a notice to pay which I did online before the end of the calendar year. That way it’s done and dusted without worrying about the 31 January deadline.

There’s a phone number on the form 0300 200 3310 for general enquiries. You will need your National Insurance numbers to hand.

Doing a self-assessment online is very simple. You each need an account, of course, again simple to set up on the HMRC website.
When you submit details of your income etc., just halve the amount of interest from any joint bank or savings.

Thank you that is being helpful. I sent a letter today recorded delivery asking if the amount is for joint or single savings. There is one thousand deducted from his demand. I am now wondering if he pays the amount asked and I also do when I get a demand then we both get a thousand pound. As we share everything perhaps it doesn’t really matter who pays exactly what. I intend to download the suggested tax app suggested in the demand.We don’t have building societies on line so depend on paperwork. We have online banking but not with Nationwide just another well known bank. We are both well in our eighties and have never dealt with paying tax. In the old days we would fill in a paper tax statement but this was always within the interest they actually took and only did it once in every few years. At the moment I would take the easiest way out as I have health issues and I am supposed not to stress. I will have a go on line to see if I can manage it. I would sooner they gave me a demand and it was off my mind. Sorry to be so feeble.

Many people will be in this situation. After the crash of 2008, we had fourteen years of record low interest rates where savers had minimal returns on their savings. Rates started rising again towards the end of 2022 due to the cost of living crisis. Fixed-rate term investments usually offer the best return so many people investing for 12 months would have received a decent amount of interest in late 2023 and beyond.

You query seems to hinge on what you said later, not in the opening post:

… my dh needs to know what we had from the Nationwide bond in 23 to 24 which was changed from Virgin to them in the Spring of that year.

Spring of 2023?

Bonds pay interest either monthly, annually or longer. The precise date of investment and whether you opted for monthly or annual income would determine which tax year interest falls into. If you opened the account on or after 6 April 2023 and opted for annual interest then it would normally be paid on the one year anniversary which would be on or after 6 April 2024. That would put it into tax year 2024-25 so any tax wouldn't need to be paid until 31 January 2026.

This might explain why you haven’t had a Statement of Interest. If interest was paid in 2023-24, I would be very surprised if Nationwide hadn’t already sent you a statement.

I understand what you are saying about sharing everything but you have to make sure that you are both getting all the tax free allowances to which you are both entitled.

You are both entitled to a tax-free Personal Allowance of £12,570 and a Personal Savings Allowance of £1000 (higher rate taxpayers £500). Also, If someone has income (other than from savings) which is less than £17,250, they are also entitled to a starting rate for savings of up to £5000.

This link again explains how this works.

www.gov.uk/apply-tax-free-interest-on-savings

If one spouse does not need of all their tax-free Personal Allowance, they can transfer up to £1,260 of it to the other. This is called Marriage Allowance.

Example: say one spouse has pension income of £20,000 and the other has pension income of £10,000. They also have interest of £4,000 on a joint account - £2,000 each.

The spouse with the pension income of £10,000 would not have to pay tax on their pension or their share of the interest and could transfer £1,260 Marriage Allowance to their spouse.

If they didn’t and HMRC assessed all of the interest on the spouse with the higher income, they would pay £652 too much tax - 20% on the £2,000 that is the income of the other spouse and 20% on the £1,260 tax-free Personal Allowance (Marriage Allowance) that could have been transferred

I hope that makes sense.

You have taken the first step of writing to HMRC about the joint account. Now you need to figure out what your own tax liability is, if any, and pay it before the deadline of 31 January 2025.

www.gov.uk/self-assessment-tax-returns/deadlines

Yes I need to do this as I have a different tax office. I thought they would have contacted me as my dh’s tax office did. They referred to it as a new simple assessment which would be simple for us. In the past some years ago they asked us to fill in a form which we did so have expected them to contact us again if necessary. The link you sent me and the information about the Nationwide bond which was opened last May having been transferred from Virgin is the tricky bit. Will have to sort through everything we can find. What a headache! Much sooner the building societies reverted to deducting the tax as they used to do.

Simple Assessment letters (PA302) are usually sent between July and August after the end of the tax year, although they can be sent at any time as information becomes available.

Yes, you need to pin down the date you moved the money from Virgin to the Nationwide bond. Is the income paid monthly or annually? If annually then it would have been paid on the anniversary of the date you invested in the bond. If monthly, the first payment would usually be at the end of the first full month. If monthly and you invested in Spring of 2023 you should be able to sum the interest from the statements for wherever you have the interest paid into.

Taxing at source doesn't really work with the generous tax free allowances now: the Personal Savings Allowance or the starting rate. An awful lot of people would be having to claim end of year refunds. Assuming people are using their annual tax free ISA allowance of £20,000, they would need to have over £20,000 invested elsewhere at 5% to exceed the PSA. The average person in the UK has less than £20,000 in savings.

Thank you so much everyone. My dh wants to pay the demand as it seems about right. He didn’t receive it until well into January although the letter had been dated mid December. there isn’t much time left and we just want to get shot of it. Also looked at what interest I have and I need to contact them but I need a P60 from Teachers pensions. You are expected to download it and it has been impossible to log on lately. I rang them today and was told they would send it by post. Will then contact HDMI and ask them if I should fill in a self assessment or wait for the Simple Assessment which is what dh had. Both seem rather late in the day. However, hoping it will get sorted out.

Ps Flittermouse. Found the closing statement of the Virgin at the end of March which we used to assess the interest and then worked out what was paid to us by Nationwide from May 23to May 24 and added the interest which had been paid. So seemed around what had been estimated. So thank you so much for your kind help.

Your P60 for 2023-24 should have been available soon after 5 April 2024. Alternatively, you can pull the numbers from your month 12 payslip for that year.

Let me get this right. You had an investment with Virgin which matured or was closed March 2023. That would fall onto tax year 2022-23.

What happened between then and May 2023 - for those two months? Did you not reinvest the money straight away?

Was the Nationwide a monthly or annual bond?

If you invested in a 12 month bond in May 2023 paying interest annually then the interest would have been paid on the first anniversary. That would be May 2024 which is in 2024-25 tax year. Tax on that wouldn't have to be paid until January 2026.

When does interest arise?

Interest ‘arises’ when it is received or made available to the recipient. Interest has been made available if it is credited to an account on which the account holder is free to draw.

www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2440

I can understand you want to get this sorted by 31 January 2025 but make sure you don't pay more than is the correct amount and dont pay it a year earlier than you have to!

Flitter Mouse. We too couldn’t understand the gap between March and May! However, we just included what we saw on this statement. Anyway, having decided to pay my dh told me to wait until today when I wasn’t so tired. Luckily I didn’t do it and then this morning we both received tax recodings which said we owed money because of savings but as we were joint holders they had split the debt between us and spread the debt over the next months up to April. We will then be coded as should have been for last year for the coming year. So probably we will overpay if the base rate goes down. Perhaps my letter saying we were joint holders of all our savings instigated this. So thank you soo much. I hope this settles this and he doesn’t hear anything else regarding the charge. I can’t thank you enough for everything you have tried to help
me with. You are right I think it is probably less than I worked out.I am so relieved I don’t have to deal with this. My ulcer isn’t enjoying the experience 😂

Georgesgran

Firstly, I think it depends why you have to complete a tax return in the first place.
I did my mine (I have a rental house, so I’m classed for self assessment) before Xmas and it came back as expected, but there’s a new system in place, known as Advance Payment, so as well as what I thought I’d owe, I’ve to pay a further 50% of that figure by the end of this month. An example would be, if I owe £1K, I’ve to pay £1500 in January and a further £500 in July. The advance amount is based on what my income is expected to be for 24/25.

The theory is that I’ve had the income from 23/24 and would normally not pay any tax until 25, whereas those receiving pensions/other income are paying their tax as they receive their income.

Does that make sense? Is your demand literally half as much again as you were expecting?
Look up HMRC Advance Payments - it explained it all to me.

We have the same problem Georgesgram.
We let out a property. If we owe over £1k we have to pay what we owe plus a further 50% in January and a further 50% in July 'on account'. Then pay hardly anything the following year due to already having paid 'on account'.
It's ridiculous, each year alternating paying a huge amount or barely anything. It makes it difficult to budget

We fill in self assessment forms every year.
We have state pensions, teachers’ pensions and income from letting.
We always request that any tax owed is paid through our tax code. We never have to pay HMRC direct. We find that easiest.
We (well I, actually) fill in the self assessments online and send them as early as we can. It was July this year. Such a relief.

Lovetopaint HMRC will adjust tax codes for tax due for a previous year as some prefer it done that way to spread the cost. I prefer to pay tax on investment income separately so that the only adjustment to my tax code is for State Pension.

I’m surprised if HMRC is making tax code adjustments for this current tax year 2024-25 as there are only two full months to go, February 2025 and March 2025. Do you mean they are adjusting the tax codes for 2025-26?

You won’t be overpaying if the base rate goes down unless you mean that HMRC is also making tax code adjustment(s) for estimated interest for other years. If so, it’s another reason to keep things separate so that you only pay what is owed and not before you have to - Tax on interest received in 2023-24 by 31 January 2025, tax on interest received in 2024-25 by 31 January 2026 and so on.

So long as you are satisfied that you have declared the correct amount of interest for 2023-24 and have claimed all the allowances that you are entitled to e.g the starting rate depending on what your income is. The PSA should be given automatically.

If you are going to leave your investment with the same buliding society I would urge you to manage this online. That way you will have access the Statement on Interest on the joint account soon after the end of tax year on 5 April 2025 and won’t have to worry about paper statements.

Once you get your P60s for 2024-25 (or get the numbers from your online pension portai), you can make your tax return earlier (or at least get the figures ready) so you know where you and what you owe rather than have this last minute panic.

sundowngirl and Georgesgran I made advance payments on self-employment profits for years, it's not a new thing. I seem to remember it was for an amount over £2,000 though?
Maybe it's different rules for rental income?

Strikes me that its easier then if you have separate accounts in future? Especially for savings.