Savings Interest for HMRC Self Assessment

[CorradoTDI]

Hi all,

Just completing a self assessment for the first time and it's fairly straight forward (for me) apart from the Savings Interest part...

Do we actually need to look at every account and the interest recieved over the course of a tax year? Surely they will get this information from the banks and what about joint accounts!?!

I'm only having to fill it in as I need to pay a high income child benifit charge and total interest I'm sure is under £400 but when I put in the figure, it increases the amount I owe and have to pay back quite significatly as it increases my income - I just don't understand why as the tax free allowance is £500 for interest is it not?

If it wasn't for this I'd have been done in 20 mins and even quicker if the pre-populated from the employment details that they already have!!

Edited by CorradoTDI on Sunday 29th January 12:18

[The Leaper]

CorradoTDI said:

Hi all,

Just completing a self assessment for the first time and it's fairly straight forward (for me) apart from the Savings Interest part...

Do we actually need to look at every account and the interest recieved ovber a year? Surely they will get this information from the banks and what about joint accounts!?!

I'm only having to fill it in as I need to pay a high income child benifit charge and total interest I'm sure is under £400 but when I put in the figure, it increases the amount I owe and have to pay back quite significatly as it increases my income - I just don't understand why as the tax free allowance is £500 for interest is it not?

If it wasn't for this I'd have been done in 20 mins!

Re your para 2:

• Yes, I think that you will need to look at every individual savings account in order to accurately record savings income in your SA. You need to record the total, not individual amounts per savings account.

• For joint accounts, divide the total savings interest by the number of persons holding the account (usually 2, husband and wife) and show the result for the person completing the SA.

Remember, it is your responsibility to accurately account for all your income tax liabilities, nobody else.

If you are going to be completing SA regularly, my advice is ensure that for each tax year you retain copies of all the relevant documents as they are produced/sent to you, AND to maintain a spreadsheet showing these items. If you maintain the spreadsheet every time you get a document etc, all you'll need to do at the end of the tax year is total the separate items and enter them in the SA, a quick process in my case.

R.

[Mr Pointy]

Yes you do have to total up the interest received for all accounts. I don't think there's any additional allowance for interest received - are you thinking of the allowance for dividends?

[egomeister]

The Leaper said:

CorradoTDI said:

Hi all,

Just completing a self assessment for the first time and it's fairly straight forward (for me) apart from the Savings Interest part...

Do we actually need to look at every account and the interest recieved ovber a year? Surely they will get this information from the banks and what about joint accounts!?!

I'm only having to fill it in as I need to pay a high income child benifit charge and total interest I'm sure is under £400 but when I put in the figure, it increases the amount I owe and have to pay back quite significatly as it increases my income - I just don't understand why as the tax free allowance is £500 for interest is it not?

If it wasn't for this I'd have been done in 20 mins!

Re your para 2:

• Yes, I think that you will need to look at every individual savings account in order to accurately record savings income in your SA. You need to record the total, not individual amounts per savings account.

• For joint accounts, divide the total savings interest by the number of persons holding the account (usually 2, husband and wife) and show the result for the person completing the SA.

Remember, it is your responsibility to accurately account for all your income tax liabilities, nobody else.

If you are going to be completing SA regularly, my advice is ensure that for each tax year you retain copies of all the relevant documents as they are produced/sent to you, AND to maintain a spreadsheet showing these items. If you maintain the spreadsheet every time you get a document etc, all you'll need to do at the end of the tax year is total the separate items and enter them in the SA, a quick process in my case.

R.

Just to clarify, you need to look at all your taxable savings accounts but not your Individual Savings Accounts (ISA) as these are tax free. You should be able to find an end of financial year tax statement from most accounts on your paper statements or online banking although some places are inexplicably rubbish at generating a clear document for this stuff.

As a general rule, I'd agree with the suggestion to run a spreadsheet or similar as you go along in future or set the tax statements as they turn up after 6th April. It's also worth keeping an eye on any accounts you close as some places are terrible at giving you a closing statement with all the info clearly listed and they will likely disappear from online banking as soon as they are shut...

I think The Leaper was unfortunate in his choice of words here give the ambiguity with the savings product!

[CorradoTDI]

Thanks guys and good call with the spreadsheet...

I didn't axpect to have to do one tbh - it came off the back of me needing to pay back a portion of child benifit....

What I don't understand is that this charge is £420 which I fully understand - when I put a figure of £400 in for Interest earnings it rises by around 50% !?

I'm now going through all my accounts, monthy to calculate the interest - none of the banks so far seem to offer any kind of yearly statement showing interest earned!

[Mr Pointy]

CorradoTDI said:

Thanks guys and good call with the spreadsheet...

I didn't axpect to have to do one tbh - it came off the back of me needing to pay back a portion of child benifit....

What I don't understand is that this charge is £420 which I fully understand - when I put a figure of £400 in for Interest earnings it rises by around 50% !?

I'm now going through all my accounts, monthy to calculate the interest - none of the banks so far seem to offer any kind of yearly statement showing interest earned!

Are you sure? You might have to look online & look for "Tax Certificate", although the Nationwide for instance will only post it to you. Interest paid should also appear in any statements you have.

[CorradoTDI]

Mr Pointy said:

CorradoTDI said:

Thanks guys and good call with the spreadsheet...

I didn't axpect to have to do one tbh - it came off the back of me needing to pay back a portion of child benifit....

What I don't understand is that this charge is £420 which I fully understand - when I put a figure of £400 in for Interest earnings it rises by around 50% !?

I'm now going through all my accounts, monthy to calculate the interest - none of the banks so far seem to offer any kind of yearly statement showing interest earned!

Are you sure? You might have to look online & look for "Tax Certificate", although the Nationwide for instance will only post it to you. Interest paid should also appear in any statements you have.

I'm just getting from monthly statements right now... doesn't help that I've moved money around quite a bit chasing interest rates etc.

[The Leaper]

Mr Pointy said:

CorradoTDI said:

Thanks guys and good call with the spreadsheet...

I didn't axpect to have to do one tbh - it came off the back of me needing to pay back a portion of child benifit....

What I don't understand is that this charge is £420 which I fully understand - when I put a figure of £400 in for Interest earnings it rises by around 50% !?

I'm now going through all my accounts, monthy to calculate the interest - none of the banks so far seem to offer any kind of yearly statement showing interest earned!

Are you sure? You might have to look online & look for "Tax Certificate", although the Nationwide for instance will only post it to you. Interest paid should also appear in any statements you have.

I agree with what's said. I think that any financial company offering savings accounts is legally obliged to provide the saver with a tax certificate when requested. Many do not do so automatically so they have to be asked for, and many are slow to respond.

I do not envy you your task if as you say you have several savings accounts and you have "chased interest rates" during the tax year. You have only a few days remaining before the SA is to be filed, and an automatic fine will be incurred if you failed to meet HMRC's deadline.

R.

[egomeister]

If you can't see a separate tax certificate document, have a look in the first statement after the financial year as the info might be in there.

If you are ok with using spreadsheets you might be able to download transactions for the year and filter the interest payments that way.

[CorradoTDI]

egomeister said:

If you can't see a separate tax certificate document, have a look in the first statement after the financial year as the info might be in there.

If you are ok with using spreadsheets you might be able to download transactions for the year and filter the interest payments that way.

Thanks - I'm just going through monthly statments and putting the interest into Excel... there's only about 7 accounts and some were only funded for a few months as I moved the cash so it's not too bad... just some are app only which is a bit tedious!

You'd just think in this day and age the HMRC would just have the info on the account...

I still don't understand how this interest affects the ammount I owe the HMRC though for the HICBC?? Can anyone explain as it's under the £500 allowance?

[egomeister]

CorradoTDI said:

Thanks - I'm just going through monthly statments and putting the interest into Excel... there's only about 7 accounts and some were only funded for a few months as I moved the cash so it's not too bad... just some are app only which is a bit tedious!

You'd just think in this day and age the HMRC would just have the info on the account...

I still don't understand how this interest affects the ammount I owe the HMRC though for the HICBC?? Can anyone explain as it's under the £500 allowance?

Be careful what you wish for - the less anyone has their hooks into my finances the better!

I can't speak with any knowledge about your scenario, but could be it that the interest payments as income are included in the calculation for the child benefit, irrespective of any tax allowance for that specific bit of income?

[CorradoTDI]

egomeister said:

I can't speak with any knowledge about your scenario, but could be it that the interest payments as income are included in the calculation for the child benefit, irrespective of any tax allowance for that specific bit of income?

That's exactly what it looks like but if I was earling under 50k they'd have no knowledge of this as I wouldn't have the HICBC or tax return to do.

[Mr Pointy]

egomeister said:

I can't speak with any knowledge about your scenario, but could be it that the interest payments as income are included in the calculation for the child benefit, irrespective of any tax allowance for that specific bit of income?

What allowance? I don't think there's an allowance for interest income, unlike dividend income.

[The Leaper]

Mr Pointy said:

egomeister said:

I can't speak with any knowledge about your scenario, but could be it that the interest payments as income are included in the calculation for the child benefit, irrespective of any tax allowance for that specific bit of income?

What allowance? I don't think there's an allowance for interest income, unlike dividend income.

My understanding is:

Interest from savings current tax year:

• Basic-rate (20%) taxpayers: can earn £1,000 in savings interest per year with no tax
• Higher-rate (40%) taxpayers: can earn £500 in savings interest per year with no tax
• Additional-rate (45%) taxpayers: £0 – they do not get an allowance.

Dividends from shareholdings have different allowances and tax rates.

R.

[CorradoTDI]

The Leaper said:

Mr Pointy said:

egomeister said:

I can't speak with any knowledge about your scenario, but could be it that the interest payments as income are included in the calculation for the child benefit, irrespective of any tax allowance for that specific bit of income?

What allowance? I don't think there's an allowance for interest income, unlike dividend income.

My understanding is:

Interest from savings current tax year:

• Basic-rate (20%) taxpayers: can earn £1,000 in savings interest per year with no tax
• Higher-rate (40%) taxpayers: can earn £500 in savings interest per year with no tax
• Additional-rate (45%) taxpayers: £0 – they do not get an allowance.

Dividends from shareholdings have different allowances and tax rates.

R.

Me too - so it appears to be affecting the amount I am having to repay in income tax which should just be the HICBC...

[duckson]

Its total earnings so from salary and interest and dividends and you have to add on things like health care that you might receive from an employer.

I'm borderline going to be over £50k this year but i should scrape in just under i think (just gross (total taxable) salary earned (work pension already reducing this) plus interest for me), I've indicated that any March bonus should be paid into my work pension or i'd be over £50k for sure.

The interest £500 or £1000 allowance you get is just the tax rate you'd pay on that amount (effectively 0% interest for these amounts).....it's still earnings in the tax year hence why it's counted.

HICTB charge isn't overly known about especially by people who are PAYE, someone at work had a letter in October just gone from HMRC as it looks like he went over £50k and didnt do a SA (as he's never done one in his life and didnt know HICTB existed). It has and will continue to catch people out.

[Eric Mc]

It’s been around about ten years now but new parents continue to get caught out by it.
There needs to be some awareness campaign.