Do You Earn £500 A Year in Interest? If you do then you need to read this urgently.
Should you be doing a tax return next month and you do not even know it?
Reminder: Taxed At Source Interest Stopped 21 months ago
From April 2016, income tax deducted at source from bank or building society deposit accounts stopped. No, we are not talking about Cash ISAs, we are talking about all cash deposit savings interest.
At the same time, and in addition to ISA allowances, a new Personal Savings Allowance started. If you're a basic rate taxpayer you can receive up to £1,000 pa in savings interest tax-free. Higher rate taxpayers can receive up to £500 pa in tax free interest. Additional rate tax-payers have no allowance.
Why is this so important now?
This all started on 06/04/2016. The tax year 06/04/2016 to 05/04/2017 ended 9 months ago and tax returns for tax year 17/17 are due by the 31 January 2018. Excluding tax free cash ISA interest, if you received interest and/or if you received bank account loyalty rewards (these too are classed as taxable income) that exceeded the above allowances in 2016/2017 you need to file a tax return by the end of January.
At present, HMRC cannot simply access your bank details but there is a push with the Personal Tax Account to automatically link your bank accounts to your tax account. It’s coming!
The reality is we have all been receiving interest with no tax deduction at source for 21 months now and the time is now here for those that received larger interest amounts in excess of the personal savings allowance to declare the same for tax.