A Taxing Dilemma!
I recently recieved a letter from HMRC giving me details of my tax coding for next year. They have reduced my tax free allowance by £1625 because of "untaxed interest". Checking back they'd done the same for the prevous 2 years.
Which is a bit strange since I don't have any accounts paying me untaxed interest.
After exchanging several letters the latest one is telling me that from 6 April 2016 interest on savings accounts will no longer be taxed at source and asking me to write estimating how much interest I'm likely to receive this year so that they can update their records.
So two questions
(a) if this is starting tomorrow why have they been reducing my allowance for the past 2 years?
(b) are we now expected to write to HMRC each year with details of interest recieved from savings accounts?
It seems to me that this is simly complicating things for the majority of folk, or maybe I'm just being dense!
Any wise heads out there able to advise? Ian, with your CAB hat on, any thoughts?
Comments
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I don't know why they've adjusted your Code for the last two years, Moulesy. That doesn't sound right.
Certainly in future we're all going to have to tell HMRC of any untaxed interest by means of some sort of tax return.
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Using my husbands recent experience with the Inland Revenue, they all completely incompetent so it is plausible that you've received the wrong code.
Hubby has a company car, but for some reason they are taxing him twice for the same car. They insist that company has submitted two x P11D for him but company haven't sent any out at all! Very strange goings on but whilst being sorted hubby is paying
extortionate tax, in fact almost a quarter of his take home pay. They also estimate that he owes them £25,000 despite them sending him a rebate last year of £500 and declaring he was up to date.0 -
I recently recieved a letter from HMRC giving me details of my tax coding for next year. They have reduced my tax free allowance by £1625 because of "untaxed interest". Checking back they'd done the same for the prevous 2 years.
Which is a bit strange since I don't have any accounts paying me untaxed interest.
After exchanging several letters the latest one is telling me that from 6 April 2016 interest on savings accounts will no longer be taxed at source and asking me to write estimating how much interest I'm likely to receive this year so that they can update their records.
So two questions
(a) if this is starting tomorrow why have they been reducing my allowance for the past 2 years?
(b) are we now expected to write to HMRC each year with details of interest recieved from savings accounts?
It seems to me that this is simly complicating things for the majority of folk, or maybe I'm just being dense!
Any wise heads out there able to advise? Ian, with your CAB hat on, any thoughts?
Write your comments here...Perhaps it is to encourage those retirees from teaching, to return to the job and alleviate the teacher shortage that the customary early retirement has created.
K
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Moulesy if you listen to the latest edition of Money Box Live on iplayer, radio 4, you'll hear all about the latest changes to savings interest and tax codes. There are options out there but everything depends on your actual monthly/yearly income.
The moneysavingexpert website is another useful source of information also gov.uk.
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I recently recieved a letter from HMRC giving me details of my tax coding for next year. They have reduced my tax free allowance by £1625 because of "untaxed interest". Checking back they'd done the same for the prevous 2 years.
Which is a bit strange since I don't have any accounts paying me untaxed interest.
After exchanging several letters the latest one is telling me that from 6 April 2016 interest on savings accounts will no longer be taxed at source and asking me to write estimating how much interest I'm likely to receive this year so that they can update
their records.So two questions
(a) if this is starting tomorrow why have they been reducing my allowance for the past 2 years?
(b) are we now expected to write to HMRC each year with details of interest recieved from savings accounts?
It seems to me that this is simly complicating things for the majority of folk, or maybe I'm just being dense!
Any wise heads out there able to advise? Ian, with your CAB hat on, any thoughts?
Write your comments here...Perhaps it is to encourage those retirees from teaching, to return to the job and alleviate the teacher shortage that the customary early retirement has created.
K
That's really helpful and relevant to the discussion, K. Not!
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I recently recieved a letter from HMRC giving me details of my tax coding for next year. They have reduced my tax free allowance by £1625 because of "untaxed interest". Checking back they'd done the same for the prevous 2 years.
Which is a bit strange since I don't have any accounts paying me untaxed interest.
After exchanging several letters the latest one is telling me that from 6 April 2016 interest on savings accounts will no longer be taxed at source and asking me to write estimating how much interest I'm likely to receive this year so that they can update
their records.So two questions
(a) if this is starting tomorrow why have they been reducing my allowance for the past 2 years?
(b) are we now expected to write to HMRC each year with details of interest recieved from savings accounts?
It seems to me that this is simly complicating things for the majority of folk, or maybe I'm just being dense!
Any wise heads out there able to advise? Ian, with your CAB hat on, any thoughts?
Write your comments here...Perhaps it is to encourage those retirees from teaching, to return to the job and alleviate the teacher shortage that the customary early retirement has created.
K
Thank you for that, K. As positive and thoughtful as ever! But, hey, teacher shortages? Can't be as much of a doddle as some think then, can it?!!
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I recently recieved a letter from HMRC giving me details of my tax coding for next year. They have reduced my tax free allowance by £1625 because of "untaxed interest". Checking back they'd done the same for the prevous 2 years.
Which is a bit strange since I don't have any accounts paying me untaxed interest.
After exchanging several letters the latest one is telling me that from 6 April 2016 interest on savings accounts will no longer be taxed at source and asking me to write estimating how much interest I'm likely to receive this year so that they can update
their records.So two questions
(a) if this is starting tomorrow why have they been reducing my allowance for the past 2 years?
(b) are we now expected to write to HMRC each year with details of interest recieved from savings accounts?
It seems to me that this is simly complicating things for the majority of folk, or maybe I'm just being dense!
Any wise heads out there able to advise? Ian, with your CAB hat on, any thoughts?
Write your comments here...Perhaps it is to encourage those retirees from teaching, to return to the job and alleviate the teacher shortage that the customary early retirement has created.
K
Thank you for that, K. As positive and thoughtful as ever! But, hey, teacher shortages? Can't be as much of a doddle as some think then, can it?!!
Write your comments here...Or perhaps the job's not challenging enough to attract the bright graduates.
K
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Moulesy.....we don't advise on tax matters at CAB.
But my own personal view would be.....they've made a mistake! Unless you expect (or they expect you) to receive a lot of interest for the forthcoming year (more than your savings tax allowance).
But even then, I cannot think of a reason for them making an adjustment for the last 2 years.
How come you didn't query it 2 years ago?
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I had them trying to charge me tax on untaxed interest a few years back.......Halifax had wrongly reported interest on my ISA.......took a while for them to believe me.
The new tax free interest allowance will be up to £1000 interest if you pay 20% tax, up to £500 if you are a 40% taxpayer.
All interest will be paid gross, if you have more than as above, you will need to tell HMRC. ISA's are over and above these limits.
Sounds wrong in previous years M, don't you do a tax return every year? You will need to write or phone them, easiest to get through first thing in the morning.
Sounds like you can expect a handy tax refund!
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OH had her tax free ISA taxed. It took several long and expensive calls and lots of letters to semi resolve it. Still not completely sorted because, if course, there is no means for a bank to retrieve tax paid to HMRC and return it to a tax free account.
Once they've got it they do their utmost to keep it0 -
Moulesy.....we don't advise on tax matters at CAB.
But my own personal view would be.....they've made a mistake! Unless you expect (or they expect you) to receive a lot of interest for the forthcoming year (more than your savings tax allowance).
But even then, I cannot think of a reason for them making an adjustment for the last 2 years.
How come you didn't query it 2 years ago?
Good question Ian. It was only when I got this year child-friendly (
)
statement that I saw it. So before I wrote I checked back. I had always - obviously rather foolishly - assumed I could rely on what they were doing!
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In my experience you "always" have to check HMRC figures. They are wrong more often than they are right. As to untaxed interest, at average returns atm you will need about £60K on deposit if you are a basic rate taxpayer before it becomes an issue.
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I would ring HMRC, you may have a long wait as half the country will be doing this at the moment but armed with your evidence you'll probably get it sorted more quickly than sending letters.
Rang this evening, only a 10 minute wait. Was on for 45 minutes with them again though and still ony partially resolved.
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In my experience you "always" have to check HMRC figures. They are wrong more often than they are right. As to untaxed interest,
at average returns atm you will need about £60K on deposit if you are a basic rate taxpayer before it becomes an issue.I think we may have found your problem, Moulesy......
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In my experience you "always" have to check HMRC figures. They are wrong more often than they are right. As to untaxed interest,
at average returns atm you will need about £60K on deposit if you are a basic rate taxpayer before it becomes an issue.I think we may have found your problem, Moulesy......
More research needed there CY, We are getting at least 3% on all savings, with 4% and 5% on some.
And mainly tax free even now as OH is a non-taxpayer.
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In my experience you "always" have to check HMRC figures. They are wrong more often than they are right. As to untaxed interest,
at average returns atm you will need about £60K on deposit if you are a basic rate taxpayer before it becomes an issue.I think we may have found your problem, Moulesy......
Clearly I'm going to have to "spend, spend, spend"! So huge twin axle van and gas guzzling 4x4 to start with, the rest will have to be used for the butler's salary!!
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In my experience you "always" have to check HMRC figures. They are wrong more often than they are right. As to untaxed interest,
at average returns atm you will need about £60K on deposit if you are a basic rate taxpayer before it becomes an issue.I think we may have found your problem, Moulesy......
Clearly I'm going to have to "spend, spend, spend"! So huge twin axle van and gas guzzling 4x4 to start with, the rest will have to be used for the butler's salary!!
Glad to hear that you won't be spending it frivolously......
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They do seem to make lots of mistakes. I make a point of writing to them every year, detailing earnings and interest. However, as well as the mess up with the ISA I mentioned earlier. They also taxed me again for the same items after I had sent them a cheque, and another year on a bond that was taxed at source. That they put down to a new computer programme that had not been programmed properly. It took an official complaint to sort that out. I can recommend that if you are really having problems. Once you write saying you want to make an official complaint, they appoint you a specific person you can contact. They are also forced to put time scales on their replies. Although the first deadline just brought a we need more time, but they did meet the second.
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