Latest news with #PersonalSavingsAllowance
Daily Mirror
15-07-2025
- Business
- Daily Mirror
Thousands of Brits face surprise tax bill letter from HMRC
The taxman has been sending out letters to people in the UK in a bid to register for self-assessment or ordering them to pay extra tax People with savings of £3500 or more are being warned that they may receive an unexpected tax bill from HM Revenue and Customs (HMRC) in the forthcoming weeks. HMRC has the capability to automatically detect interest accrued on your bank savings, and if this exceeds a certain limit, you will be issued a notice for an additional tax payment. With the new 2025-25 tax year already underway, the tax authority has been dispatching letters to individuals, urging them to register for self-assessment or instructing them to pay extra tax. Now that the entire previous financial year has concluded, HMRC is evaluating people's financial circumstances and issuing tax bills to those found to owe tax on their savings accounts. Your bank automatically reports these details to the taxman unless your savings are held in a Cash ISA, which is tax-exempt, reports the Daily Record. Under the Personal Savings Allowance rules, you can accumulate up to £1000 per annum in savings interest in your bank accounts without it being taxed, but this only applies to individuals earning less than £50,270. If your earnings exceed £50,271, your Personal Savings Allowance is reduced to a mere £500. And if your income reaches £125,000, your Personal Savings Allowance plummets to £0. The precise amount you will owe depends on your earnings, the amount of interest you received, and when it was paid out. However, you may face a tax bill with savings as low as £3500 if you had invested it in a three-year fixed savings account, as the interest is paid out in a single lump sum. In a fixed account, the interest is considered taxable in the year it is received, rather than being spread out over the account's term. For instance, if you deposited £3500 into a three-year fixed savings account earning 5% interest, you would accrue over £500 in interest. The interest on fixed accounts is "crystallised" upon payout, meaning you receive the entire interest amount at once. In this scenario, the £500+ interest payment would exceed your £500 Personal Savings Allowance, potentially triggering a letter from HMRC, especially if you have other interest-earning accounts. High-income earners should be aware that exceeding the Personal Savings Allowance by just £100 would result in a £40 tax liability, as 40% of every £1 above the allowance is taxed.
Daily Record
11-07-2025
- Business
- Daily Record
People with £3.5k or more savings could face surprise tax bill letter from HMRC
The organisation is able to automatically identify interest on savings generated by your bank account and if you go over a certain threshold, you will be sent a notice of an additional tax bill. People in Lanarkshire with £3500 or more in savings are being warned they may face a surprise tax bill letter from HM Revenue and Customs in the coming weeks. HMRC is able to automatically identify interest on savings generated by your bank account and if you go over a certain threshold, you will be sent a notice of an additional tax bill. With the new tax year 2025-25 having already started, the taxman has been sending out letters to people urging them to register for self-assessment or ordering them to pay extra tax. As the entire previous financial year is now complete, HMRC is now assessing people's financial situations and handing out tax bills to those who it finds owe money in tax on savings accounts. Details of this are automatically reported to the taxman by your bank unless it is in a Cash ISA, which is protected from tax. The Personal Savings Allowance rules mean you can accumulate £1000 per year in savings interest in your bank accounts without being taxed on it, but this only applies to individuals earning less than £50,270. If you earn £50,271 or over, your Personal Savings Allowance is reduced to just £500. And if you earn £125,000, your Personal Savings Allowance drops to £0. The exact amount you will owe depends on how much you earn, how much interest you got, and when it was paid out. However, you could be hit with a tax bill with as little as £3500 in savings if you had placed it into a fixed savings account for three years as the interest is all paid out in one go in a fixed account, so the interest counts in only one tax year all at once. If you put £3500 into a fixed savings account at five per cent for three years, you will gain over £500 in interest. With fixed accounts, the interest is 'crystallised' the moment the interest is paid out and you receive all the interest at once. For example, if you put it away for three years, the money is paid out all in one go at the end of that three-year term. With just over £500 being paid out at once, this means you would go over your £500 Personal Savings Allowance even without taking into account any interest from any other accounts you hold which is likely to result in a letter from HMRC. For those who are high-income earners, you lose 40 per cent of every £1 over £500, not per cent. This means that even going £100 over the Personal Savings Allowance would cost you £40. And did you know Lanarkshire Live had its own app? Download yours for free here.
Daily Record
07-07-2025
- Business
- Daily Record
HMRC warning as those with £3,500 or more in savings accounts being sent tax bill letters
HMRC may send you a tax bill letter if you have more than £3,500 in your savings account Those with £3,500 or more in savings are being warned they may face a surprise tax bill letter from HM Revenue and Customs in the coming weeks. HMRC is able to automatically identify interest on savings generated by your bank account and if you go over a certain threshold, you will be sent a notice of an additional tax bill. With the new tax year 2025-25 having already started, the taxman has been sending out letters to people urging them to register for self-assessment or ordering them to pay extra tax. As the entire previous financial year is now complete, HMRC is now assessing people's financial situations and handing out tax bills to those who it finds owe money in tax on savings accounts. Details of this are automatically reported to the taxman by your bank unless it is in a Cash ISA, which is protected from tax. The Personal Savings Allowance rules mean you can accumulate £1,000 per year in savings interest in your bank accounts without being taxed on it, but this only applies to individuals earning less than £50,270. If you earn £50,271 or over, your Personal Savings Allowance is reduced to just £500. And if you earn £125,000, your Personal Savings Allowance drops to £0, the Express reports. The exact amount you will owe depends on how much you earn, how much interest you got, and when it was paid out. However, you could be hit with a tax bill with as little as £3,500 in savings if you had placed it into a fixed savings account for three years as the interest is all paid out in one go in a fixed account, so the interest counts in only one tax year all at once. If you put £3,500 into a fixed savings account at 5 per cent for three years, you will gain over £500 in interest. With fixed accounts, the interest is 'crystallised' the moment the interest is paid out and you receive all the interest at once. Join the Daily Record's WhatsApp community here an d get the latest news sent straight to your messages For example, if you put it away for three years, the money is paid out all in one go at the end of that three-year term. With just over £500 being paid out at once, this means you would go over your £500 Personal Savings Allowance even without taking into account any interest from any other accounts you hold which is likely to result in a letter from HMRC. For those who are high-income earners, you lose 40 per cent of every £1 over £500, not per cent. This means that even going £100 over the Personal Savings Allowance would cost you £40. If you had more money in savings, you would be able to go over the allowance even with a non-fixed, easy-access account. For example, if you put £11,000 in a savings account for one year at 5 per cent, you would earn £550 of interest, which would move you above the threshold and mean you owe tax to HMRC if you earn over £50,270. Even if you earned less than £50,270, if you had savings of £21,000 at 5% for one year, you would accumulate £1,050 of interest and owe money to HMRC because you would go over your £1,000 allowance. There are multiple potential sources of income that count towards your Personal Savings Allowance. According to the Government, the accounts affected are: Bank and building society accounts Savings and credit union accounts Unit trusts, investment trusts and open-ended investment companies Peer-to-peer lending Trust funds Payment protection insurance (PPI) Government or company bonds Life annuity payments Some life insurance contracts HMRC states 'If you go over your allowance, you pay tax on any interest over your allowance at your usual rate of income tax. "If you're 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."
Daily Mirror
18-06-2025
- Business
- Daily Mirror
Martin Lewis winter fuel payment savings alert and says 'move it'
Personal finance expert said that people may be caught out by their savings interest and miss out on the payment Personal finance expert Martin Lewis has issued an alert to savers that having their money in the wrong accounts could push them over the threshold and make them miss out on the winter fuel payment. The cash which is aimed at helping some of the poorest people in the country have enough cash to put the heating on, has been reinstated for this year by Chancellor Rachel Reeves for around 9 million pensioners who missed out last year. However there's a cut off at £35,000 - anyone earning more won't get the winter fuel payment. Mr Lewis explained that this relates to taxable income - and although savings are exempt, any interest earned on savings is not. For basic rate taxpayers earning under £50,270 there is savings allowance of £1,000 tax free - which means you could have £20,000 in a 5 per cent savings account and it would be tax free. Anything above that counts towards your income, and one caller to Mr Lewis' BBC Podcast was worried this would push her over the limit meaning she won't get the winter fuel payment. Caller Elaine, said she is a state pensioner and also works part time. She reckoned she earns just under £35,000 but also gets savings interest and interest from her cash ISAs. She said: 'Will that be included in the total amount of income because if it does then it puts me over the £35,000 and I won't get it. Martin replied: 'The first thing to say is the means test will be based on your taxable income for the current year that is 2025-6. It is all of your earnings that are subject to income tax. So that is is any private pension income, any state pension income, any employment income, any savings interest outside of an ISA. The interest you get inside of an ISA doesn't count, the interest outside of an ISA does count. 'We don't yet know if Premium Bond wins count or not. I'm almost certain they don't count because they're not taxable income but I'm waiting to get that confirmed. 'While the Personal Savings Allowance is an amount you are allowed to earn of savings interest tax free - as a basic rate taxpayer you can earn £1,000 of interest outside an ISA tax-free - that interest still counts towards your tax-free earnings for winter fuel payment. 'So let me just do a really simple example: you earn £1,000 of interest inside an ISA. Doesn't count. You earn £500 of interest within your Personal Savings Allowance so you don't pay tax on it. That £500 does count towards the £35,000 a year threshold.' Mr Lewis said in Elaine's case, because she hasn't used her full cash ISA £20,000 limit, she could move her savings into the cash ISA, the interest wouldn't count and therefore she wouldn't be over the threshold and she would get the winter fuel payment. Elaine said: 'I'll do that then.' Mr Lewis said investment dividends outside an ISA count, carer's allowance, incapacity benefit and other taxable state benefits also count. READ MORE: Martin Lewis helped me reclaim £14,500 in council tax before a sting in the tail In terms of what doesn't count towards the £35,000 earnings amount Mr Lewis said it included the winter fuel payment itself, investment income or savings income inside ISAs, the tax free lump sum from a pension, capital gains, and non-taxable benefits like Attendance Allowance, Disability Living Allowance Pension Credit and PIPS all don't count towards the £35,000 He added: 'If it's generally taxable, it counts, if it's generally not taxable, it doesn't count.'
Wales Online
17-06-2025
- Business
- Wales Online
People with 'modest' savings could miss out on £300 DWP Winter Fuel Payment under new rules
People with 'modest' savings could miss out on £300 DWP Winter Fuel Payment under new rules The Department for Work and Pensions is set to deny thousands the support with experts warning of several factors you should be aware of State pensioners could lose out on £300 Winter Fuel Payments from the Department for Work and Pensions due to having "modest" savings (Image: WalesOnline/Rob Browne ) State pensioners could lose out on £300 Winter Fuel Payments from the Department for Work and Pensions due to having "modest" savings. Following a recently-announced Labour Party government reversal, DWP Winter Fuel Allowances will be sent out to nine million pensioners later this year. However, Coventry Building Society has issued a warning that numerous state pensioners might inadvertently surpass the new £35,000 limit. For the best money-saving tips straight to your inbox, sign up to our Money newsletter here Interest accrued on standard savings accounts is deemed taxable income and contributes towards the threshold, even if it's within the Personal Savings Allowance and remains untaxed. For individuals nearing the £35,000 threshold already, additional income from savings could tip them over the edge. Jeremy Cox, head of Strategy at Coventry Building Society, cautioned that "thousands could still unknowingly be left out in the cold - not because they're earning more, but because their savings are." He pointed out that "many pensioners may not realise that interest earned on savings held outside of ISAs count towards their total taxable income." Article continues below He added: "With interest rates still relatively high, even modest savings can generate income that pushes someone over the threshold," reports Birmingham Live. He advised: "ISAs offer a tax-free way to keep savings interest out of the income equation. Interest earned within an ISA is never taxed and does not count toward income calculations". Financial advisers speaking to The Telegraph emphasised that those slightly above the £35,000 threshold could engage in minor behavioural tweaks to enjoy a financial uplift this coming winter. Alice Haine, from investment service Bestinvest, referred to the updated limit, saying: "It's effectively another tax cliff-edge." "Paying attention to what constitutes as income may become very important for those whose incomes hover around the £35,000 mark, as a minor adjustment could be the difference between receiving the payment or handing it back through tax," Ms Haine said. Sir Steve Webb, ex-pensions minister and partner at pension consultancy LCP, said: "The Government's own figures clearly suggest that they expect the number of losers from the new policy to rise each year. Article continues below "With around two million pensioners currently over the £35,000 threshold, this number could easily rise by another half a million by 2030. "This could end up being another way in which governments use inflation to quietly raise additional revenue year-by-year."
