Savings Interest And Tax: A Warning
17th March 2025
HM Revenue and Customs (HMRC) have issued a warning to UK resident tax payers with over £3,500 in savings interest that they could face unexpected tax bills to 5th April.
HMRC are aware of interest received on savings accounts excluding ISA’s which are tax free and as such know who have exceeded their personal savings allowance which for 2024/25 is £1,000 for basic rate taxpayers £500 for higher rate taxpayers.
This includes interest held jointly with others.
If you go over your allowance you will need to pay tax on the excess.
HMRC state…
If you are self-employed
If you complete a Self Assessment tax return, report any interest earned on savings there.
You need to register for Self Assessment if your income from savings and investments is over £10,000.
If you are employed or get a pension
HMRC will change your tax code so you pay the tax automatically. To decide your tax code, HMRC will estimate how much interest you’ll get in the current year by looking at how much you got the previous year.
HMRC will send a tax calculation letter and tell you if you have a tax overpayment or underpayment.
If you do not receive a letter by 31 March 2025, you must contact HMRC as soon as possible to avoid a penalty.
If you’re not employed, do not get a pension or do not complete Self Assessment
Your bank or building society will tell HMRC how much interest you received at the end of the year.
HMRC will tell you if you need to pay tax and how to pay it.
Get In Touch
If you require assistance in bringing your tax affairs up to date, please contact your local Whitings LLP office, and a member of our team will be happy to help you.
Disclaimer - All information in this post was correct at time of writing.
