I have a friend (not a client!) who has had a Bond that matured within Tax Year ended 2015. He is employed and paid via PAYE, earning more than £10k but less than £25k, so standard rate tax payer.
I know he needs to declare the interest on a SA, he hasn't done a Tax return before, is there a procedure to register to fill in just one tax return or is it a case that he will need to register and fill one in moving forward as this is a one off gain?
Hi Tony
Im sure they can do something if the income is less than £xx then the adjustment for the tax due can be deduct through the payroll in the following year. Now Im not sure where £xx is - I have it in my head its £3k, so you would need to check this out. If thats the case you can just issue a letter, with proof of income each year and they will adjust the tax code. Sorry I cant check it out just now as Ive got to dive out.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
" I received a text from him and he says that he received the interest net but it was more than 10K before tax was taken off.
Does this mean that the interest was below 10K? If so, then I'd assume tax hasn't been deducted making it imperative you inform HMRC.
So I take it he has been taxed at 20% on interest but we need to declare the interest on a SA to ensure he isn't a higher rate taxpayer? "
If the Revenue enter him into Self Assessment as a result of your letter, then find out what he did with the gain. If he has re-invested it in another bond then you may as well go along with HMRC's system.
My understanding of his situation is:
He is employed and taxed on employment under PAYE. His salary will be circa £20K.
In 2015 he had a bond that matured and re received gross interest in excess of £10k. (he has re invested in another 5 year bond) He is aware he should inform the revenue of the income on a SA return but has never done one before.
I assume the reason that the income must be declared is simply to check that he has paid tax at the correct rate and that he isn't a higher rate tax payer but only been taxed at 20% at source. Once filled in, I am assuming that there would be no further tax to pay. I just wondered how he should inform the revenue that he needs to fill in an SA and would ne continue to have to fill in SA's moving forward?
Hope I am making sense, I have only ever registered for anyone for SA when they have become self employed, so I wanted to be cautious with my advise to him.
I wasn't saying a whole lot but with the word 'gain' around thought this was a question worth further delving. I see you have done, anyway.
With it being another 5 years before you know he'll need to make another declaration then I'd just write to them showing Gross Tax and Net columns. Use the phrase 'one off' to try and avoid SA chore if possible.
If there was any reason they couldn't code out the liability, they would issue an SA Notice.
I wasn't saying a whole lot but with the word 'gain' around thought this was a question worth further delving. I see you have done, anyway.
With it being another 5 years before you know he'll need to make another declaration then I'd just write to them showing Gross Tax and Net columns. Use the phrase 'one off' to try and avoid SA chore if possible.
If there was any reason they couldn't code out the liability, they would issue an SA Notice.
Best regards, Tim
Thanks for answering that one whilst Ive been out Tim (had it in my head to check when I got back)
Tony - dont forget to include supporting documentation in your letter to HMRC when you write in. You could even phone them first and see what they say (Ive done that before!) They can be quite practical sometimes and will avoid teh SA route where they can!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
