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Sam
Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I wonder about the rules on tax regarding certain savings

Resolved Question:

I wonder about the rules on tax regarding certain savings accounts and whether that effects my need for either a Self Assessment Tax return or a UTR.
Submitted: 11 months ago.
Category: Tax
Expert:  Sam replied 11 months ago.

Hi

Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.

Could you advise

1) what type of savings/investments you have and whether any tax is deducted from interest awarded

2) your total gross income (including these savings)

I can then advise further

Thanks

Sam

Customer: replied 11 months ago.
OK
my situation does alter but my savings are all in an NS and i Direct Saver account. Every now and then I transfer some money to my HSBC current account which i partially live off. My other income is low, from seasonal work which gets taxed as PAYE and from rental income that is nowhere near the thresholds.I am a bit concerned that I have got this wrong and that I will need to do a Self Assement Tax return anyway, or that I have misunderstood my savings account
Customer: replied 11 months ago.
Here is an example though for a given year.private rental 6000
seasonable work 3000
money from NSandi savings 10000i have been under the impression that only the interest from the NSand i gets taxed after either a £500 or £1000 allowance. The total in that savings account is around 125k and the interest doesn't usually go past £1000.My total income is so low due to ill health that i never reach the 11,000 taxable threshold anyway.I hope I havent made any serious mistakes. Please could you advise as I'm a bit worried. Thank you
Expert:  Sam replied 11 months ago.

Hi

You would have to do self assessment anyway due to the receipt of rental income - as even though its below the threshold HMRC do not know this - and this income can only be considered and declared through the completion of self assessment returns -

Then regarding the savings - you do not indicate whether this is an ISA (in which case the interest is tax free) but the withdrawal within the time period specified may negate this - in which case - again you would need to include aby interest awarded within the self assessment tax return

Thanks

Sam

Expert:  Sam replied 11 months ago.

Hi

Thanks for your furtehr post - you would have to complete self assessment anyway due to the rental income and you only need to declare the interest from the savings account - not the actual withdrawals (unless an ISA and the terms not breached)

Thanks

Sam

Customer: replied 11 months ago.
It sounds like the rental part means I count as self assessed. Does this mean I need a UTR?
Will I be penalised for not having done a self assessment before if this has roughly been my situation for 3 years?The savings account with NSand I is not an ISA but a Direct Saver account linked to my HSBC current account. In declaring the interest from the NSandi account - does that get added to my total taxable ammount? What is the threshold for a direct saver?
http://www.nsandi.com/direct-saver
on this link it says taxable-paid gross. What does this mean?
Customer: replied 11 months ago.
On the government website it says3. If your total taxable income is less than 17,000 you wont pay tax on any savings income. Does this mean even if say my interest from nsand i exceeds the £1000 allowance i wouldn't pay 20% on it?
Expert:  Sam replied 11 months ago.

Hi

Yes you would need to register for self assessment which would allow HMRC to issue with an 10 digit Unique Taxpayer Reference (UTR) and they would then either issue you paper tax returns to complete OR you could then register to file online.

You will be charged penalties for the fact you have not completed self assessment tax return (back to when the rental income began - if this was three years ago)

The interest if paid gross then has to be added to your total income - and only if this plus your other income sees you in excess of the total taxable income position - and would still need declaring as gross interest on the self assessment tax return (so remember its the interest the account earns NOT what you have withdrawn from the account)

So as the rental income and seasonal work is only £9000 a year - then you have at this stage NIL tax and National Insurance (as the seasonal work annually is below the National Insurance limit but if paid say over just a three month period would be subject to come National Insurance) so as long as your interest gross is less than £2000 a year - then you will owe no tax (and interest is not subject to National Insurance either)

So register for self assessment link here

https://online.hmrc.gov.uk/shortforms/form/SA1?dept-name=&sub-dept-name=&location=43&origin=http://www.hmrc.gov.uk

The £17000 limit relates to the fact there is a savings limit - and if your savings interest paid is less than £1000 a year - then it will NOT attract any tax (so you get the £11,000 income personal allowance PLUS a £1000 savings interest allowance as a individual who earns less than £43000 a year )

Thanks

Sam

Customer: replied 11 months ago.
OK, what will the penalty be for not doing a Self Assessment return!? It was a genuine mistake that will actually make zero difference in what I owe (as you've set out above)
Will i need to do a return backdated for each tax year? April 2014 - 2015 and April 2015 - 2016. I imagine i dont need to do the one for this year yet?
Customer: replied 11 months ago.
thanks this is all very helpful!
Expert:  Sam replied 11 months ago.

Hi

Thanks for your response

This will be £100 for each tax return outstanding and NIL tax owed.

Yes you will need to file one for April 2014 - April 2015 (if the rental income began between these two dates - and then for 2015/2016 you have until 31/10/2016 (if you file a paper return and until 31/01/2017 if you file online) then this year (2016/3107 does not become available for completion until after 05/04/2017)

My advsie once you have registered (through the link I gave you) and have received through the post your 10 digit unique taxpayer reference - then telephone HMRC ( their contact details will be on the UTR issue letter) then ask them to issue you with the old self assessment returns ( they then will give you 30 days to complete these)

If you need help completing them - then you can always ask for assistance via Just Answer, if you would prefer me to help then just ask for me (Sam) in your post - and you can always ask other experts to hold off and await for me to come online , if you would prefer.

I can then offer a telephone service (which make life easier when completing forms - but I will advsie this will incur a charge over and above the question value, as you have a subscription - but an accountant would charge at least £500 a return - so its still exceptionally good value for money!

But for now with this post - let me know if I can assist further

Thanks

Sam

Customer: replied 11 months ago.
thank you. I have just registered and called HMRC and they are not charging any penalties providing i complete previous years by 25/1/17. They are posting out my UTR.
You have been very helpful and im sure i will contact you further down the line by phone or online.
I only have one final question at this stage - the rental income i mentoned (around 6000 a year) is not from land property but a houseboat. I suppose this makes no difference to needing to submit a return but i only ask because i know the rules concerning houseboats and tax are sometimes slightly different.
Many thanks - 5 stars!
Fred
Expert:  Sam replied 11 months ago.

Hi

That's wonderful news regarding the penalty!

The fact that the rent comes from a houseboat makes no difference to HMRC - and the rules are the same - its just different for council tax purposes that's all

Thanks

Sam

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