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Post by Deleted on Jan 28, 2017 18:21:31 GMT
Quick Tax Related Query
If I earn less than my personal savings allowance of £500 in interest from P2P do I still need to declare this to HMRC despite not owing tax on it ??
Also looking forward, interest earned in P2P IFISA, does this need declared to HMRC ??
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oldgrumpy
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Post by oldgrumpy on Jan 28, 2017 18:25:59 GMT
I think you do if you have been asked to fill in returns. HMRC will make allowance for the first £1000 of interest not to be taxed 2016-2017 , but for 2015-16 but they need to know how much you have received P2P untaxed (+ tax credit) as well as from banks etc, with tax already deducted. The new tax free £1000 started April 2016.
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archie
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Post by archie on Jan 28, 2017 18:34:50 GMT
You don't need to declare interest from any type of ISA.
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Post by Deleted on Jan 28, 2017 18:44:35 GMT
I think you do if you have been asked to fill in returns. HMRC will make allowance for the first £1000 of interest not to be taxed 2016-2017 , but for 2015-16 but they need to know how much you have received P2P untaxed (+ tax credit) as well as from banks etc, with tax already deducted. The new tax free £1000 started April 2016. I won't be filling in returns for 16/17 but will almost certainly need to 17/18 Due to current tax band my tax free is £500 interest as opposed to the £1000, I'm new to P2P so have only tried a few platforms in the second half of the tax year and am purposely keeping my interest below this amount. I had hoped that meant I had no requirement to report to HMRC for 16/17, prefer the easy life!
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Post by Deleted on Jan 28, 2017 21:55:15 GMT
Depends on your total from current/savings accounts and some other investments. I am a 40% tax payer but in that horrid zone where the personal allowance reduces - by £1 for every £2 of income above the limit,making the marginal tax rate 52.5%. So I try to use my CG and dividends allowance. Apart from my uninformed first week, I have not bought on the FS SM; only on the PM and sell (albeit at a discount) on the SM - my returns since joining in Sept are 80% capital gains, 20% interest. The numbers are small but every little helps. So if my total interest from all savings/p2p is under my PSA I don't need to declare the P2P interest? I am just about to join you in that 'horrid zone' but my understanding is the marginal tax is 60%?  I haven't looked into Capital Gains / Dividends allowance but with the increasing ISA allowance more can always be sheltered in S&S ISA alongside launching IFISA
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Post by Deleted on Jan 28, 2017 23:16:19 GMT
You definitely need to declare all interest. The automated system gives you whatever allowance you have left. Is it possible to declare P2P interest without getting in to submitting a full self assessment?
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treeman
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Post by treeman on Jan 29, 2017 0:00:26 GMT
You definitely need to declare all interest. The automated system gives you whatever allowance you have left. Is it possible to declare P2P interest without getting in to submitting a full self assessment? Yes! My missus just phoned HMRC once she had the relevant tax statements to hand (June IIRC) - said she had some untaxed P2P interest (within PSA) to declare, gave the details and it was all done over the phone there and then. No letters to send and no Self Assessment. Less than 10 mins. I believe there may be a limit on how much untaxed interest you can declare this way - If I ever knew I've not felt the need to remember ............. May be worth calling HMRC in advance to see if that would work in your circumstances. Bound to be some ifs and buts. Best to declare everything, however small, whether there's tax due or not, in case you are unfortunate enough to get a future shakedown.
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Post by solicitorious on Jan 29, 2017 18:26:19 GMT
You definitely need to declare all interest. The automated system gives you whatever allowance you have left. I worked the marginal rate as being 40% plus half of 25%, but you are correct - it is essentially 60% as the same amount of 25% stuff will be pushed into the 40% band. Means taking 3.9-4% on a 5 month holding on FS by selling on the SM, and taking that tax free if you have space in the CG £11,100 allowance is much better than taking 6.5% at 6 months and losing 3.9% in tax, clearing 2.6% net in 6 months..........it actually almost doubles the return if repeated even without reinvesting the gain. Fairly focuses the mind. I try to utilise that and the dividend allowance - it amazes me how many people are not aware that there is effectively another 16k tax allowance via these routes. I bed and ISA from my S&S account to crystalise some CG. I used to get out of the penalty zone by adding to my SIPP but that is no longer viable, so the last couple of years have reduced the impact with VCT contributions. It really seems that we need to squeeze at the margins where we can. I am new to P2P but see that all the SM on abundance is at a premium above accrued earnings, so that's another place I shall try to use to make CG rather than income. I am sure there are other platforms where this can be done to some extent to reduce tax owed - having purchased at a small premium on ABL it allows for a smidgeon of CG. I thought there were no CGT implications for selling parts at a discount? And no taxable interest either, if the accrued interest 'parcel' is passed to someone else?
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mason
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Post by mason on Jan 30, 2017 6:40:52 GMT
So if my total interest from all savings/p2p is under my PSA I don't need to declare the P2P interest? You definitely need to declare all interest. The automated system gives you whatever allowance you have left. I don't think this is correct. My understanding is that you only need to make a declaration to HMRC if you have a tax liability. It seems @nirish is on PAYE for this tax year, so if all interest income falls within the personal savings allowance nothing would need to be declared, unless a liability exists for CGT, dividend income etc. If the above is wrong and all untaxed interest must be declared to HMRC, even if the individual has no unmet tax liability for the year, then there will be millions of people that will fall foul of this by earning a few quid in gross interest from their bank accounts during this tax year. Personally, I'll be earning considerably more interest than would fall within the personal savings allowance, so I will be writing HMRC a letter as soon as my total interest figure is known, but have already offset the liability by investing in a VCT, so expect a net refund. I probably wouldn't be in such a hurry if I had a net liability.
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SteveT
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Post by SteveT on Jan 30, 2017 7:31:44 GMT
That's more or less my understanding too (from a couple of different sources, including www.gov.uk/apply-tax-free-interest-on-savings/how-much-tax-you-pay). As from April 2016, if you already complete a self-assessment return then you declare all your interest there in the normal way. However, if you don't already need to submit a tax return then you don't need to start, since HMRC will be informed of your interest earnings by the banks / building societies / P2P platforms you use and any tax due will be recovered by adjusting your tax code. |
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oldgrumpy
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Post by oldgrumpy on Jan 30, 2017 9:58:55 GMT
That's more or less my understanding too (from a couple of different sources, including www.gov.uk/apply-tax-free-interest-on-savings/how-much-tax-you-pay). As from April 2016, if you already complete a self-assessment return then you declare all your interest there in the normal way. However, if you don't already need to submit a tax return then you don't need to start, since HMRC will be informed of your interest earnings by the banks / building societies / P2P platforms you use and any tax due will be recovered by adjusting your tax code. I think that's right, but before the amount became too high to do on PAYE I sent them a letter declaring all my P2P interest and HMRC altered my PAYE code. 2014-2015 and 2015-2016 I had to declare all in self-assessment online (a damn sight easier than when I used to do my late mother's SA on paper!!), but from 2016 on self assessment or any declaration will not be needed if interest amounts are <£1000, but ALL interest must be declared 2016-2017 and the £1000 allowance will be automatically applied. Anyway - I've submitted mine .... and the (grudging) first payment - so they can s** off.
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Post by Deleted on Jan 30, 2017 10:45:33 GMT
That's more or less my understanding too (from a couple of different sources, including www.gov.uk/apply-tax-free-interest-on-savings/how-much-tax-you-pay). As from April 2016, if you already complete a self-assessment return then you declare all your interest there in the normal way. However, if you don't already need to submit a tax return then you don't need to start, since HMRC will be informed of your interest earnings by the banks / building societies / P2P platforms you use and any tax due will be recovered by adjusting your tax code. I didn't think HMRC received information on P2P earnings??
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Post by Deleted on Jan 30, 2017 10:48:06 GMT
That's more or less my understanding too (from a couple of different sources, including www.gov.uk/apply-tax-free-interest-on-savings/how-much-tax-you-pay). As from April 2016, if you already complete a self-assessment return then you declare all your interest there in the normal way. However, if you don't already need to submit a tax return then you don't need to start, since HMRC will be informed of your interest earnings by the banks / building societies / P2P platforms you use and any tax due will be recovered by adjusting your tax code. I think that's right, but before the amount became too high to do on PAYE I sent them a letter declaring all my P2P interest and HMRC altered my PAYE code. 2014-2015 and 2015-2016 I had to declare all in self-assessment online (a damn sight easier than when I used to do my late mother's SA on paper!!), but from 2016 on self assessment or any declaration will not be needed if interest amounts are <£1000, but ALL interest must be declared 2016-2017 and the £1000 allowance will be automatically applied.Anyway - I've submitted mine .... and the (grudging) first payment - so they can s** off. I'm sure I'm just getting myself confused but are these two statements not the opposite of each other?
From 2016 declaration not needed under 1000 but ALL interest must be declared 16-17 ........
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oldgrumpy
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Post by oldgrumpy on Jan 30, 2017 11:09:15 GMT
Totally confusing. (note to self -Twit). If you don't fill in SAss from 2016 on you don't need to declare <£1000 P2P interest. If you do fill in SAss you do declare it regardless of whether it is < or > than £1000 so HMRC can apply the appropriate allowance. I'd better leave it to others to clarify better  . |
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Liz
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Post by Liz on Jan 30, 2017 11:22:34 GMT
Quick Tax Related Query If I earn less than my personal savings allowance of £500 in interest from P2P do I still need to declare this to HMRC despite not owing tax on it ?? Also looking forward, interest earned in P2P IFISA, does this need declared to HMRC ?? Try this HMRC calculator: www.gov.uk/check-if-you-need-a-tax-return
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