When you receive your PAYE code or tax computation, carefully check any amount of interest shown as received.
HMRC regularly receives details of interest paid by banks and building societies to individuals. In the past, it has used this information to check the amounts on tax returns. However, it is now inserting the actual interest receipts into tax computations (form P800), and simple assessments (form PA302).
HMRC is also using 2016-17 interest data as a proxy for the interest expected to be received in 2017-18 and 2018-19 and is amending PAYE codes (forms P2) accordingly. Interest on joint accounts should not be used but the fact that the account is held jointly may not have been reported accurately by the bank.
You won’t pay tax on interest if it is covered by your personal savings allowance of £1,000 (£500 for higher rate taxpayers). Where you have little earned or pension income, your interest may be covered by your savings rate band of £5,000.
If you believe the figures in your PAYE code are incorrect you can ask for an amendment using your personal tax account; ask us how.
