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Self Assessment - Bank Interest

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    Self Assessment - Bank Interest

    Hi all,

    Now that we are close to the SA deadline ive submitted my return but I don't really agree with the calculation, I was wondering what other peoples views are before i even attempt to query it

    Like many people i expect I have taken dividends to the end of the basic rate band and was expecting a tax bill for just that, however the SA calc has taken the bank interest I earnt which is under the PSA (and not taxed it as its under the PSA) however its used that figure to push all the income figures to the right, so that my dividend now falls into the higher rate tax band by exactly the same as the interest amount earnt. Therefore although the interest was tax free the net result is that it makes the dividends more taxable.

    Thoughts anyone?

    Thanks,
    Anthony

    #2
    I think what's happened is that the savings interest is calculated as income, even though it's not taxed in its own right.
    That has pushed your dividends into the higher rate as the threshold is based on income including your savings interest.

    Double check with your accountant, but I reckon that'll cost you no more than £325.
    See You Next Tuesday

    Comment


      #3
      Yeah thats what it looked like.

      I havent filed my SA with the accountant and the tax HMRC wants from me for this is less than they would charge me to file it so just wanted some opinions on if its HMRC being wrong or just their interpertation of the rules being in their favour (again!)

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        #4
        Originally posted by antuk View Post
        Yeah thats what it looked like.

        I havent filed my SA with the accountant and the tax HMRC wants from me for this is less than they would charge me to file it so just wanted some opinions on if its HMRC being wrong or just their interpertation of the rules being in their favour (again!)
        Dividends are top slice income, the psa does not extend your basic rate tax band so the interest income would restrict your basic rate dividends available.

        Comment


          #5
          Thanks, thats what i thought has happened. I guess thats why its advertised as free interest as it wouldnt affect traditional employees in the same way

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