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Where Taxpayers and Advisers Meet

Tax code and Bank Interest

Lulu301
Posts:1
Joined:Thu Aug 26, 2021 5:15 pm
Tax code and Bank Interest

Postby Lulu301 » Thu Aug 26, 2021 5:47 pm

Hello

My tax code is for this year should be 1257L. But it is 1250L. I decided to telephone HMRC to find out why each year my code is always a few digits different to what it should be. According to the "helpline" at HMRC the reason for this is that my bank keeps sending them a BBSI return? each year. Do banks and building societys send one of these for everyone and does that mean no one with a bank account that earns even a small amount of interest has a code that reflects the personal allowance? I was told yes !
This year my bank apparently sent one with a figure on of less that £130 of untaxed interest. £80 interest was on the return from an account that has not had any money in for 15 months?
I tried to explain everyone is entitled to earn £1000 in interest (or £500 if you are lucky enough or not so lucky to be a 40% tax payer). I was told that it was because the bank I am with keeps sending them this return and the "HMRC system" changes my tax code to account for this untaxed interest I have received.
I have been told by HMRC to contact my bank as they can not change the way the system works.
I have telephone the bank and not supprisngly they have no idea what the HMRC are talking about!!
So who should I believe, what should my tax code be?

"If you can't blind the poor tax paying workers with science baffle them withh Bulls**t"

Jholm
Posts:222
Joined:Mon Mar 11, 2019 4:22 pm

Re: Tax code and Bank Interest

Postby Jholm » Fri Aug 27, 2021 9:03 am

Call them again and ask them to remove it. It literally should be that simple.

robbob
Posts:3150
Joined:Wed Aug 06, 2008 4:01 pm

Re: Tax code and Bank Interest

Postby robbob » Fri Aug 27, 2021 11:01 am

So who should I believe, what should my tax code be?

The buck rests with hmrc - the problem is they are a shambles and ultimately you will need to keep correcting them when things are wrong.

It makes no sense for them to code out anything when amounts are below £500 - as you say i would have presumed they would have taken the £500 or £1000 into acount before coding as there is nothing to code for sums below this level.
HMRC have really lost the plot at the top that they complete sprouting complete gibberish withoit makming any sense or taking any reponsibility.

You could try ringing up and demnd that nothing is included in your code that is obviously wrong and see what they say and then complain if needs be - its reidiculous that they know they are at fault and they simply now advise mass campaign of complaining is needed before anything is done.

Practicably speaking it this keeps popping back you will need to keep correcting them - i simply cannot fathom why they are making life this hard for themselves whne its plainly obvious that certain "dynamic codes" are pure tripe - one suspects they are trying to pull a fast one and rob normal taxpayers of moeny they don;t owe - i suspoect a complain about the head honhos directed at them muight ultimmately eventually succeed - they have aduty of care to not knowingly "overtax anyone" if the computer knowingly does that they must be breaking their own rules soemwhere.

D&C
Posts:52
Joined:Mon Nov 25, 2019 11:35 pm

Re: Tax code and Bank Interest

Postby D&C » Sat Aug 28, 2021 8:20 pm

In fact everyone starts by being able to earn £18,570 in interest before paying tax, not £1,000 (or £500).

If the job or pension your tax code applies to is going to pay you £12509 or less then the tax code is correct and you will not pay any tax. You have spare Personal Allowances which are being used up the by the interest and you are not able to make use of savings nil rate of tax (aka Personal Savings Allowance).

If your expected pension/earnings will be more than £12,509 then you simply need to update your estimated earnings/pension with HMRC and a revised tax code, removing the interest deduction would be issued.

The saddest things about this is that whoever you spoke to in HMRC couldn't just explain that to you.

A front line worker in a bank is unlikely to know about the data they (do) send to HMRC but that is really irrelevant, you should never have needed to speak to your bank about this in the first place. Unless you think they have reported incorrect amounts to HMRC.


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