Interest & tax

By the time I'm earning enough interest to owe tax on it hopefully the IFISA will be available.

If you're PAYE you can just tell HMRC how much you earned above the allowance and then supply any evidence they ask for.

Interest payers have to inform HMRC of payments made so they will know what you have received whether you declare it or not, so my advice would be to tell them. Regard your marginal interest rate on SS to be 9.6% after tax - still pretty good.

It's usually paid by around lunchtime. 

Give them a chance to get into the office, drink some coffee etc.

It was a Friday last month, maybe the person responsible wanted to get away for a long weekend, and as someone mentioned has a hangover to clear on a Monday.

On the matter of declaring for tax, Lendy Ltd/SS might send the information o HMRC but irrespective of whether they do or not it is still the responsibility of the taxpayer to inform HMRC of the income.  For most people this can be done either by a self assessment tax return, a letter to HMRC or (when they become fully operational) opening a "tax account" on gov.uk.  ISAs will shield some income from tax but there are limits on the capital that can be invested in them, although you will probably be able to transfer existing ISAs into the IFISA.

Penalties for not declaring income are quite severe.

Dan - I went to the Tax Statement tab and set the dates for the last Tax year then exported it to PDF. Then posted it to HMRC, they are kind enough to adjust my PAYE code.

My understanding is you have until 1st Oct 2016 to tell them about Tax year '15-'16 but don't quote me on that.

Tell HMRC as appropriate and pay the tax, of course. Platforms are required by law to notify HMRC and HMRC has asked platforms for reports. All that will happen if you don't tell HMRC is that if the amount is not trivial HMRC will get interested in you in a negative way and potentially add penalties and interest to the tax you should have paid.

If you have not declared past years just get on with telling HMRC by phone or letter and they are likely to take no action other than collecting the tax due, particularly if it's only a few hundred Pounds of interest. So don't worry about it, just get on with doing it.

For normal UK resident individual tax payers (so not non-doms or companies) the effective date for the interest earned is the day that it is first paid to you, regardless of which account it is paid to. So a P2P platform account counts and it doesn't matter whether you take it out at the time or not.

A company or non-dom may need to use accrual basis which has an effective tax date at the time the interest accrued, not the time when it was paid.

I buy VCTs. 30% tax relief from HMRC limited at the income tax actually due by you for the tax year of purchase, have to hold for at least five years or repay the 30%, lots of variation in risk level among VCTs. Completely legal and I'm doing quite nicely from the combination.

For example, I asked a platform that was doing interest on a loan by hand to pay me in this tax year rather than last for a payment formally due to be calculated and paid at the end of March. As an individual this moved the tax year but using accrual basis it wouldn't have because it still was contractually due to accrue at the end of the month.
That helped to fine tune my tax bill closer to zero after I'd earlier done the planning steps I could do earlier in the year.


This is a potentially useful bit of tax optimisation and it might be worth asking Saving Stream if they can do this to shift their 1 April payment to 6 April for those who want that, assuming nobody indicates that it won't be effective for tax purposes. It's potentially a bit of last minute tax tuning for those who have already used their other planning options earlier in the year.