News7 mins ago
Savings Interest Tax Allowance.
I think I earned more interest than the tax free £1000 allowance in 22/23 & 23/24 but have yet to receive any calculation/assessment of tax owed from HMRC.
They say the banks will report the interest to HMRC & no self-assessment tax return is required.
Has anyone here been charged tax on their interest?
Answers
No best answer has yet been selected by davebro3. Once a best answer has been selected, it will be shown here.
For more on marking an answer as the "Best Answer", please visit our FAQ.hi dave bro. My mum is in the same position, she got something like £1003.87 interest and is now completely panicking over having to pay tax and how she tells them (my dad used to sort this stuff out but he died last year) i cant advise her because i will never have enough money to get 1k in interest :)
As I understand it you are concerned because you know you have to pay tax if your interest is over £1k in a financial year (assuming you already pay tax on income).
You have received more than £1k interest but the website states you only need to self assess if you exceed £10k interest in a year.
Have I got that right? You know you should be paying tax but don't need to self-assess so you are worried about how the tax will be collected.
The 23/24 ones are still being worked on. They usually aim to work it all out by October (end of October in my experience) so maybe check up in a month from now.
The 22/23 one should have been done. My guess is that they don't alway bother chasing it up if the amount involved is small- so if you were only say £25 over. Mine was £1010 and they DID pick up on it in 2022/23 because I was a higher rate taxpayer (total income was just over the higher threshold by a few when interest was included) so my savings allowance was reduced to £500 and I was asked for £204 (£40% of £510)-ouch!
Sometimes they ask for a one-off payment, sometimes they adjust your code for next year, and sometimes they let you choose.
Yes, my wife was just over and it wasn't picked up.
My guess is that if the interest i s spread over several insitutions they might not pick it all up, and also if the amount of tax due is small- say 20% of £30 they won't bother for £6, just as they have said they are not going to start claiming tax (yet) from pensioners who are only marginally above the £12570 allowance this year.
Yes indeed, it's not very well known, and I think it's something that could be removed. I never understood how anyone earning less than £18750 could get £5000 of interest pa as that would mean having savings of over £100,000 (and that's on top of ISA savings). I never understand why chancellors fiddle around with little things like that.