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Personal saving allowance: Do you still need to declare bank interest on a SA

littly_kittly
Posts: 1
Joined: Wed Jan 11, 2017 9:26 am

Personal saving allowance: Do you still need to declare bank interest on a SA

Postby littly_kittly » Wed Jan 11, 2017 9:30 am

Personal saving allowance: Do you still need to declare bank interest on a Self Assessment form?

The Personal Saving Allowance means that the first £1000 of bank interest is tax free.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/354204/sa150.pdf
^ The Self assessment guidance says the following:

(Page TRG 7)
You must include in your return the interest you receive on bank, building
society and other savings accounts, and on loans, unless it is specifically
non-taxable. You must include interest in kind here.

So does that mean you no longer have to declare the interest (because the personal saving allowance means it’s no longer taxable)?

https://www.gov.uk/government/publications/personal-savings-allowance-factsheet/personal-savings-allowance#what-you-need-to-do
^ But then the gov.uk page on the Personal Savings Allowance says the following:

7. If you fill in a Self Assessment tax return you should carry on doing this as normal.
So does that mean you do have to declare it, because that would be the normal thing to do?

SteLacca
Posts: 221
Joined: Fri Aug 07, 2015 2:17 pm

Re: Personal saving allowance: Do you still need to declare bank interest on a SA

Postby SteLacca » Wed Jan 11, 2017 2:28 pm

The personal savings allowance is not, strictly, an allowance, but is rather a nil rate band for savings income. How much the nil rate relates to is dependent upon your total income (£1,000, £500 or £0). Even if you have interest of less than £500, if you are close to the basic rate threshold you may find that savings taxed at 0% push you into the higher rate band, and so can still lead to extra tax being payable (even worse if your other income is £42,001 and you have exactly £1,000 interest. That extra £1 attracts a tax liability of £101.)

Because of the interaction with other income, and the overall rates of tax payable (not to mention the amount of PSA available) you do need to declare it on your Return.


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