My question is about tax. I don't know what I need to do about interest on savings outside the ISA.
30 January 2023
Question by Ann
I retired at the end of March.
I have some money in an ISA - so I'm clear about tax situation on that.
The rest of the money I have in a ZOPA savings account - simply because i needed to do something with it.
My question is about tax. I don't know what I need to do about interest on savings. (outside the ISA)
Do I need to inform HMRC or does the bank do it?
I can't get a consistent response from ZOPA about whether they inform HMRC.
If I have to inform HMRC how do I do it?
Reading their website they seem to be saying if you are employed or have a pension you don't need to fill in a self assessment form. So what do you fill in?
HMRC seems difficult to communicate with and if you don't really understand their website you are stuffed.
I think the interest I am allowed to have per year without paying tax is £1,000 as a basic rate tax payer. Is this right?
If you earn under the £1,000 do you still need to tell them?
If you earn above - what do you do?
Thanks
Ann
Answered by Daniel Barrett
Dear Ann
You are correct in that if you are a basic-rate taxpayer, you have a Personal Savings Allowance (PSA) of £1,000. If the total interest you receive in a tax year is less than this you don’t need to do anything. If the interest you earn is more than your PSA, you may have to pay any tax due to HMRC. HMRC will normally collect tax by changing your tax code (if you have pension income for example), or through self-assessment. 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.
Kind regards,
Daniel
