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Savings Income ~ new rules

Savings Income ~ new rules

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I have been helping a neighbour after she received her 2014/15  “Your Annual Tax Summary” form, which showed “Other Income” of £3250 in the calculation. As she is a BR taxpayer and it clearly related to savings income it made no difference to the tax being paid on her various pensions’ income. Being a non-SATR customer, she didn’t quite know where HMRC had obtained this information and I helped her draft a letter to HMRC. She received a reply ~  within 21 days!!! ~  & they explained that the basis of this had been an estimated figure provided by her in 2011 (inheritance invested in various savings bonds at the time).

In 2010/11 one might have been able to achieve rates for 2 year savings bonds from Building Societies etc. @ around 3.5% ~ double or more than what can be had currently, but HMRC seem to have made no adjustments to the estimate for the drastic drop in interest rates since. When the new system for taxing savings income is implemented, HMRC will, no doubt, include this self same estimate (which will be 5 or more years out of date by then). If so, this taxpayer would then be taxed (via an adjustment in her coding) on £2250 whereas her total taxable savings income is more likely to be £1200. We included this estimate in the letter and HMRC have now updated their records in readiness, but I suspect there will be some people who will merely accept the new coding without realising it could be wildly out. How long (if ever) will it take HMRC to review these figures and repay any overpaid tax?

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By Andywho is fed up
08th Dec 2015 16:51

HMRC review

I think you already know the answer to this from your final sentence.  They won't, it will be for the taxpayer to tell them its wrong or just suffer any extra tax etc! 

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By RetiredTax
08th Dec 2015 23:56

Annual Tax summary
Yes- it was a rhetorical question.

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