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Post Info TOPIC: bank interest for tax return
lor


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bank interest for tax return
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Hi All

Just a quick question that I wish to make sure that I am 100% clear on.

When completing a clients self assessment tax return, when it comes to the part where you need to put interest received does this only incl business a/c or is this including any bank a/c in the clients name (personal ones).

Thank you in advance for your answers.

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Amy8n


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It includes interest from all bank accounts. The self assessment tax return declares all income, not just that from business.

Hope that helps.


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 Amy
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lor


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Thank you Amy, do you have to put the whole amount that you receive as interest? Obviously less any tax on it? is this correct?

Another thought what would you do with interest earned with a joint ac? would you spilt it?

-- Edited by lor on Tuesday 24th of November 2009 08:47:28 PM

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Flex Accounting Services


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interest entered into a self assessment tax return needs to be grossed up

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Beverley Flanagan MICB, CB Dip, PM Dip.
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farmergiles


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Interest earned in a joint account needs splitting 50/50 (if two names on account)

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BackOfficeGroup


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if the bank account is a limited company account, then you should not include this interest on the clients SA, but if they are a sole trader with a business account, then do include it.

P

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lor


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it is self employed client.

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BackOfficeGroup


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then yes, all bank interest needs to be shown - you'll need the net, tax and gross figures.

P

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lor


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what about personal credit cards where you are charged interest on the balance would you allocate this against bank interest to reduce the amount of interest or would interest payable (from a personal credit card) not be shown at all on the Self Assessment Tax Return.....

-- Edited by lor on Thursday 26th of November 2009 08:32:34 AM

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farmergiles


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Unless the credit card is used wholly and exclusively for the business you cannot include the interest charges on your self assessment.
And don't forget that you don't net off interest charges, they have to be shown separately, ie interest received and interest paid.

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lor


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thank you farmer giles again.

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lor


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why do you have to declare interest earned from your personal a/c as well as business a/c, (would that also include tax free isa's) sorry wondering what the reason for this is.

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BackOfficeGroup


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lor

when you are self employed, any income is seen as taxable income, unless you can prove otherwise. Also and more relevant, if you are a 40% tax payer, then they want their extra bit of tax that you will not have paid on your interest received, as the banks will only deduct basic rate tax at source.

ISA's do not go on the tax return.

Hope that helps.

P

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lor


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Okay, that is making more sense now, thank you for that.

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