ICAEW questions interest income self assessment threshold

The ICAEW is calling for clarification from HMRC for criteria for filing a self assessment return where savers earn £10,000 more before tax and income from share dividends is £10,000 before tax

It is not clear, the institute said in a blog, what people, with income falling below these thresholds on which tax is due, must do.

For example, people may have income which exceeds the personal savings allowance or dividend nil rate band, the ICAEW said.

The personal savings allowance currently stands at £1,000 earned from interest, falling to £500 for higher rate taxpayers.

‘The information on gov.uk is incomplete on this point,’ it said.

The institute adds the untaxed income below the thresholds for self assessment ‘must be reported to HMRC by phoning the HMRC contact centre (0300 200 3300) or the agent line’.

Where possible HMRC will collect the tax due on savings income by making an adjustment to the taxpayer’s PAYE tax code. In cases where this is not possible, for example because there is no source of income liable to PAYE or the PAYE income is insufficient to take the adjustment, HMRC will put the taxpayer into self assessment and issue a tax return.

HMRC generally carries tax code adjustments for interest and dividends forward to subsequent tax years; in such cases it will be important to monitor tax codes and to notify HMRC if the amount of income changes.

The criteria for filing a self assessment tax return is here.

Calum Fuller |Assistant editor, Accountancy magazine (up to 2018)

Calum Fuller is former assistant editor of Accountancy magazine and Accountancy Daily, published by ...

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