40% question Savings

Eh...? AFAIK the only account that needs an NI # is an ISA - which is tax free and does not need to be declared

You may need to fill in a self-assessment form. Work out what you owe or what the IR owes you for a given tax year.

Welcome to the club.

I think it is unlikely to be a big concern if you are just above the threshold and only have small savings. Theoretically the IR can charge thumping great big penalties on late payers.

I think the IR is fully occupied working out tax credits. In my experience they cannot even get a simple tax code correct, even when advised 3 times by telephone and in writing... so God help anyone with more 'complex' affairs...

Sorry another newbie, so is it that if your above the basic threshold you should be paying 40% tax on all savings accounts (current account etc etc & if so how do you pay it?) surely everyone doesn't do a self assesment thingy do they ???

You'll have to pay extra tax on any interest you earned if you're in the 40% band -

20% is taken off at source, you have to pay another 20% of the gross interest, or 25% of the net, to make it 40%. Also there's extra tax to pay on dividends and any other income you get where basic rate tax is deducted at source.

On the plus side if you made any private pension contributions or gift aid donations you can get tax back, since these only give basic rate tax relief at source. You'll get about 23% of the net contribution/donation back. If you're in a company pension scheme then this almost certainly won't apply as you get full tax relief at source.

They used to send a tax return to everyone in the 40% band, but they recently stopped doing this saying it's only necessary if you earn over 100,000 or have complicated tax affairs.

I've never understood this, as you are legally obliged to tell HMRC of any income that isn't fully taxed (so that includes that 6 of current account interest if you're in the 40% band).

So HTF are you supposed to tell them other than by filling in a tax return?? So I do one every year anyway - it's pretty easy online if all you've got to declare is employment income, a bit of interest and a few gift aid donations.

Letter