Self-assessment online and savings account interest?

Conspiracy theories are always more fun than just considering you might have made a c*ck up when you filled in the form. :-)

What you will probably find is that you have put the value in the wrong box - there are different boxes for interest that has been taxed at source and for interest that has not been taxed.

Are you sure there isn't a line where the same 20p is taken of as already paid?

tim

There are two places where you can enter interest - depending on whether or not it's been taxed at source. Are you sure that you've entered it in the right place?

For interest taxed at source, you enter the net amount and it calculates the gross. Then it puts the tax into the "tax already paid" calculation.

In most cases, investment income which has already been taxed won't affect anything else. In some cases, it just might . .

For example, if your gross interest moves you into a higher tax bracket, you will be charged some more tax on all or part of it.

Similarly, if you haven't used all of your allowances elsewhere, you will get some of it back and/or qualify for some of it to be taxed at

10% rather than 20%.

Unlikely to make much difference in your case!

Ahhh, I'm an intelligent bloke so I guess the form must be deliberately confusing.

I'll edit it and resubmit just for the hell of it :-)

This seems the most likely situation.

Talking about premium bonds ... How's do you think yours have done in terms of an equivalent rate of interest?

I'm fairly sure I'm ahead but someone older and wiser will be able to provide the return. Plus there's a remote chance of bagging a million.

£12,500 invested at the end of February 2010, eligible for draws from April onwards (so you get zero interest for a month however you invest in PB).

Additional £17,500 invested in September in that account to max it out at 30k, eligible for draws from November onwards.

£10,500 invested at the same time in the wife's name.

Wins:

April 2010 - 1 x £25 May 2010 - 1 x £25 June 2010 - 3 x £25 July 2010 - 1 x £25 August 2010 - 1 x £25, 1 x £100 September 2010 - nil October 2010 - 2 x £25 November 2010 - 5 x £25 December 2010 - 6 x £25 January 2011 - 5 x £25 February 2011 - 3 x £25 March 2011 - nil April 2011 - 4 x £25 May 2011 - 5 x £25 June 2011 - 3 x £25

In message , Rasta Pickles writes

Without doing the sums, that looks like a pretty good success rate (although presumably that's for the total of £40,500). I'm impressed.

But are you the sort of person who would win some Olympic tickets - even though they never applied for any? I'm not. I have £3 of premium bonds (from the mid 50s), and of course, I've never won anything (not that I would expect to).

I've always wanted to try my luck with the full whack, but I my wife won't hear of it. I've also been rather put off by information such as this (see 'Premium Bond Calculator' link) and the other links.

The average return is £400 for £30,000 - only 1.33%.

To be honest, I'm not really sure why I've invested in Premium Bonds, I'm the sort who'd buy a ticket in a raffle where there were 10 tickets available and 9 prizes.......and I'd have the ticket that didn't win a prize.

But it doesn't stop me dreaming about what I'd do with a million :-)

I think if it wasn't for the solitary £100 prize in my winnings, the return would probably be borderline........I'm hoping someone will come along and advise as to whether the return is a good 'un.

Oddly enough, I've just gone through the PDF of my submission; under the section entitled "Income - Interest and Dividends from UK banks etc" I DID correctly enter the £1 in section 1 (taxed UK interest etc).

So either the website is buggy or HMG are scamming punters?

Now in my case it's 20p - but what about someone who has tens of thousands of pounds in an interest bearing account?

While not dismissing out of hand the possibility that there is actually a fault at the Inland Revenue's end, there must be an explanation your end because it would be all over the financial press if this was an issue 10 or more people had experienced.

As for the Inland Revenue doing this in full knowledge - ie scamming you

- seriously?

The only other thought - are you sure the 20p is shown as tax due but not paid rather? Is it perhaps shown as tax due but paid?

It's not a problem! Did you save a copy of the calculation which the HMRC system did? If so, work through it, and you'll see that it's right.

In my case, I declared net interest of £51 on the form.

The calculation shows this as £63 (gross) and works out the tax due as part of my overall gross tax bill.

*Then* it adds up all the tax already paid (PAYE etc.) and this sum *includes* the £12.75 which has been paid on the £63.

It then goes on to subtract the total amount already paid from the gross amount due in order to calculate what I still owe them.

Because of the way it does its rounding, I've actually *gained* 75p in the process (because it grossed up £51 to £63 rather than £63.75 - but credited me with the full £12.75 paid).

I'll check later.

But this system is HMG's simplified version of how to submit a tax return?

Have you actually read what you posted and then viewed it as a normal person (i.e non financially-savvy) would?

What a carve-up!!

No need! The system is simple enough at the input stage. You simply enter the net interest, and the system does the calculations without the user needing to understand them. I only spelled it out because you erroneously suspected that it was diddling everyone.

In most cases the tax already paid on bank interest equals the amount due, so they cancel out. But HMRC *has* to do the calculation this way because there are people whose bank interest affects their tax position. A few examples are:

• People who have unused allowance on their salary or pension and who can get some of the interest tax refunded

• Higher rate taxpayers who have to pay additional tax on their interest above that which the bank has deducted

• People over 65 whose bank interest puts them over the threshold for clawing back some of their Age Allowance

• Etc.

It was simple to submit the tax return.

You just didn't like the tax payable they came up with. But as has been said, most likely you misunderstood the tax calculation.