Declaring interest on savings to HMRC

You have to declare all interest over and above £1,000 if you are a standard rate tax payer.

If you are a 40% tax payer you only have a £500 tax free allowance.

If you are on anything over 40% you have zero tax free
allowance and have to declare all interest paid.

ISA’s are exempt from the above.

The bank will notify them and they will backdate any tax owed, as I know to my cost! Unless you do a self assessment then you declare it yourself.

Thank you! It seems I can safely leave it in the hands of the banks then, as I thought.

J52

The bank will notify them and they will backdate any tax owed, as I know to my cost! Unless you do a self assessment then you declare it yourself.

That recently happened to me. It was from the sale of my Late Mums home. The money was only in the account around a year, as I was the eldest it was then devided between 6 of us. The Bank sent the info to the Tax office and they sent me an eyewatering bill this year. At the time I didn't need to self assessment as they informed me I didn't need to. Never gave it a thought at the time.

All financial bodie in this country ahve to make an annual return to HMRC of what ntersst they have paid out and who to, so under normal cirumstances you do not need to declare anything to HMRC as they ahve all the information they need.

In fact one of the ways that fraud in the benefit system is found, is by running this information against the income sources declared by benifit claimants. Once had a claimant, who had not declared some income. In her case not deliberately. Somone had helped her complete her form and misread one question. She had to pay back about £1,000 of excess Pension Credit she had received over 18months. not much per week, but not easy to repay.

Most grateful to you all for clarifying.

You don't declare it as such unless you do self assessment, they will contact you with a bill or the option to adjust your tax code for the following year.

Yes and do it pdq or else you'll be in trouble.

There is also the ‘Starting Rate for Savings’. This stipulates that if you receive taxable income of up to £12,570, you can receive a further £5,000 in Interest and not pay any tax on it. The ‘Starting rate for Savings’ also operates on a ‘sliding scale’. As an example, if you receive taxable income of £15,000 pa, you can still benefit from the ‘Starting Rate for Savings’ on the amount between the income you receive and £17,570 pa (£12,570 + £5,000); so in this example, you could receive up to £2,570 in Interest and not pay any tax on it; and when adding in your Personal Savings Allowance (£1,000); with earned income of £15,000, you could still receive Interest of £3,570 and there would be no Income Tax payable. ISA interest is tax free and not part of this calculation

No need to scare people, Mabon2! Taxes are scary enough.
In my case,I should send my tax return to arrive by the end of October. However, if, for some reason I can’t, I have until early next year to declare it but that then HAS to be done online.
The Tax people send me the Tax return to complete in plenty of time.
But I HATE it with a passion!!

The tax office changed my code this year to recoup what I owe them. I had previously tried to sort it out, but was unable. However, it does mean that I will always be one year behind. Presumably to be adjusted on my death.

We assumed we would have to fill in a tax form. We didn't need to. Already received our tax code. They knew every penny we have! We are both retired.

Those in receipt of the WFA but do not qualify ie earnings over £35K will have a tax adjustment for the amount to be reclaimed for Government. Madness!

The whole system makes me sick. Our miserable interest on a life’s savings, we’re hounded for every penny. And what does this ‘government’ do with it? I think we all see what they’re doing with it, genius financial wizards that they are.

I’m no wiser I’m afraid, this tax language is very complicated. I have a state pension a smallish NHS pension and income from a rented out flat and also some interest on savings, Amounts to around 22k per annum. Are accountants fees deductible from one’s tax bill?

I did self assessment for several years but this year I filled the online form to request to opt out of self-assessment. To my delight HMRC said yes. I had already done my self-assessment this year and remember being a bit befuddled so I was double delighted when they did the actual assessment and a few days later I noticed that the tax I owe is less than that which I calculated

It is worth looking for that form. My sister has a bigger income than me and the tax office have done her assessments for years

I am obliged to complete self assessment as I receive a tiny French pension of about £30pm. This means I have to include savings interest in my SA. I worry I will forget an account as I have several, but so far HMRC have not corrected me. This year the online calculation shows that I owe more than I had reckoned was owing from the French Pension and savings interest so I need to double check. I wish I didn’t have to do it. OP be glad it will be done for you.

The bank and bldg soc now report directly, so you will get a bill at the end of the year which you can opt to pay, or they can adjust your tax code to reclaim over the year, and then they will adjust your code also in anticipation that you will be getting the same interest next year.

If you have been paye all the while you do not have to do anything (except perhaps move some of it into ISAs so you do not pay tax

Surely if you’re getting £2k every month you need to do a self assessment

Not so Newtothissite. Why do you think so?. The OP’s pensions will be taxed under PAYE and the banks will report her savings interest to HMRC.