Declaring Bank Interest on my self assessment

I'm not clear how to enter my UK bank interest on my self assessment and the reason why I'm not sure is because when I enter the £294 of interest it alters my total amount due by £73.49 but surely the £294 is within my PSA and not taxable. No benefits received, although I do receive dividends from my private limited company. From what I've seen the UK bank will inform HRMC of interest paid for HRMC consideration and tax code alteration, so will this be covered this way? Should I only be entering UK bank interest above my PSA?

Hi,
You will need to ensure you are entering the amount as untaxed interest and not taxed interest.
Thank you. 

I am entering it as untaxed interest. When I enter this as untaxed interest it alters my total amount due by £73.49 as if I'm being taxed on it - but I assume I shouldn't be taxed on it as it's below the PSA

Hi,
When you enter the interest figure it will be included in the calculation but if below the personal savings allowance you will not pay tax on this. 
Thank you.

That's my point. When I do enter the interest (as you've suggested) it alters my total amount to pay by £73.49 i.e. it is not recognising that £294 is below the personal savings allowance. I do not receive benefits, although I do receive dividends from my private limited company. Can you confirm what circumstances I would asked to pay interest on £294 of interest earned? Maybe I can then figure out why your system believes I should be paying interest

Hi 730511cjm1 mckenna,
The interest is still taxable income.
If you look further down the calculaton it should then show that the tax rate is 0% so no actual tax is due on the interest.
Thank you. 

I have the same issue as OP. I am declaring interest of £220 in the untaxed box which should be within my personal allowance as a tax payer. However, this makes a difference of around £40 to my tax calculation due. The descriptions on the boxes on the UK Interest page are really unhelpful, as they make no reference to the PSA and give you no indication of whether or not interest under £1000 (or £500 for higher rate) should be entered in the box.

Hi,
All interest (except that earned in an ISA) should still be reported.
It will then show the personal savings amount in the calculaton and if below the allowance the tax rate will be 0.
Thank you.

I am having this same issue. My savings interest is above the allowance and so I expect to pay some tax but the full amount is being taxed and the tax amount is being added in full to the tax payable.

I have exactly the same problem as OP. If I try to include bank interest, which is well within the personal savings allowance of £1000, it includes the amount on my taxable income and charges me 20%. It doesn't show the PSA when you get to your final calculation.

 

The personal savings allowance should be on the SA302 calculation. If not shown you will need to contact HMRC to review see : Self Assessment: general enquiries    . Thank you .

I earn some interest from overseas. Normally there is a form on which to declare it. When I did my online return this year the declaration was made in a free text box. Didn't feel right and I'm not sure if the amount was used in the final tax calculation.

Hi Philip,
By putting the entry into the free text box, the interest was not included in your tax calculation.
When tailoring your return, you select the foreign income option on page 1 of 3.  
You then have the option to select interest, where you enter the country name the gross interest and any tax deducted, as well as confirm you want to claim a foreign tax credit for any overseas you were required to pay.
Thank you.

This is such a frustrating example of HMRC "help". The answers given categorically don't answer the question which was actually asked. Every single time in the thread above, the problem and question is asked really, really clearly. But the answer given almost cruelly doesn't give the answer! "Do you put the full interest amount in the self assessment interest-received box(es), or do you subtract the PSA and put in the remainder." Clearly for those asking the question, it's because the calculation appears to be deducting tax erroneously. The answer given appears to be: 'put the full amount in and pay too much tax'. Brilliant.

Reading the comments above shows that one is supposed to enter all bank interest except for interest from an ISA. I had this same question as the original comment and I also noticed that my tax calculation was changing when I entered in interest received. The full calculation shows that I am not charged tax on the bank interest however it does count towards my total income for the year and so that seems to increase the repayment on my Student Loan. I don't mind paying that off at least!

Having the same issue. The interest I earned was minimal, around £100, well under the PSA. However if it's entered into the untaxed interest box, it impacts the tax calculation. Unless I'm missing something, as it's under the PSA, then it should have no impact on the tax calculation?

I too am having the same issue. Please can you clarify the position. 1. What is the tax free amount on personal savings interest? 2. How should it be entered on our self assessment forms so that any amount below the PSA is not taxed? 3. Under what circumstances is savings interest taxed when it is below the threshold? As this appears to be what all of us are seeing.

Not HMRC...unfortunately not Duncan...it impacts all sorts of things, net assessable income, student loan, allowance allocation and other situations...being within £1000 doesnt mean a lot (also its £500 if higher rate and nothing if top rate)...so you need to follow through the calculation and see what its affecting...not known the calculation to get its treatment of bank interest wrong since SA introduced in 1997.

Hi,
In answer to your questions:
1) Tax on savings interest
2) Under 'Untaxed UK Interest etc' - any applicable savings allowances should be automatically applied when your calculation is produced
3) If your savings interest is below the tax threshold, no tax should be applied.
Thank you.

Hi, Thank you for responding to my questions. Based on your answers, it seems to me that HMRC are incorrectly taxing savings interest as the original poster is suggesting. With the information provided, I should not be paying tax on my savings interest. The ONLY income I earn is through salary with tax paid via PAYE, and savings interest. I am a higher rate tax payer, so my PSA is £500. Neither have I used all my personal allowance. I have calculated a balancing payment of £17.61. As you suggest in response to question 2), I have entered my savings interest in "Untaxed UK Interest". However, I entered £0. The balancing payment calculated by HMRC matches mine: £17.61. However, when I return to the question of Untaxed UK Interest in my Self Assessment and enter £19 and return to the HMRC calculation, the balancing payment increases to £21.61. Therefore it has taxed my savings interest of £19. £19 being well below the PSA threshold of £500. When I adjust my own calculation to include £19 in my gross pay for 24/25, I also get the figure of £21.61. This seems to prove what the HMRC calculation does. If savings interest for higher rate tax payers is tax free for anything under £500, either the Self Assessment calculation is wrong or HMRC is not being clear on why savings interest under the PSA threshold is being taxed. All resources I find, including your own response, states that interest under the PSA threshold should not be taxed. But it clearly is.