Overseas Interest & use of tax allowance

If I started my working in UK half way of the tax year 2022/23 and didn't earned any salary income before. Conditions: The salary income for 2022/23 is pretty small (let say GBP2000) which is much lower than the threshold of annual personal allowance @GBP12,570. Interest income had been earned in UK and overseas, let say GBP100 and GBP1400 respectively. My inquiries: 1. Do I entitle the full or pro-rata personal allowance (GBP12,570) in 2022/23? 2. As I know overseas interest tax differently than UK interest, Can I use the balance of personal allowance; starting rate for saving (upto 5,000) or personal saving allowance (1000) to reduce taxable income in 2022/23? 3. As the overseas interest is > GBP1,000, Do I need to report it by self-assessment? TIA

Hi,

You are entitled to the full personal allowance for the 2022 to 2023 tax year, and you can use any unused balance against your overseas interest.

UK residents with foreign income or capital gains must complete a Self Assessment tax return, unless your only foreign income is dividends, and your total dividends, including UK dividends, are less than the £2000 dividend allowance. You can see more information here:                                                   

Tax on foreign income             

Check if you need to send a Self Assessment tax return

Thank you.    

Hi, Thanks for your reply. I have few more questions, 1. Shall I report reward from bank for switching of account as unearned income in self assessment? 2. If I got monthly reward from local bank for keeping certain direct debit transactions and money in that exactly same as its monthly charge to me to maintain the account. Let say: I got GBP5 reward in March 2023 and been charged by GBP5 to maintain my account in that bank in March 2023. Please advise if I shall a) report GBP5 as income only b) offset the reward (GBP5) against the charge (GBP5), no reporting is required c) report the reward (GBP5) and charge (GBP5) simultaneously 3. Please advise if I shall submit any return other than SA100 and SA106 ? TIA

Hi I have one more enquiry. Shall I report interest income in cash basis or accrual basis? Scenario: I placed a fixed deposit in GBP10,000 @3% interest p.a. on 1 May 2022 which matured on 30 April 2023. Total interest from 1 May 2022 to 30 Apr 2023=GBP300 which received on 30 April 2023 Interest accrued from 1 May 2022 to 5 April 2023, GBP10000*3%*340/365=GBP279.45 Cash basis: report GBP300 as interest income in 2023/34 tax period Accrual basis: report GBP279.45 as interest income in 2022/23 and GBP20.55 as interest income in 2023/24 (noted the computation of the GBP279.45 in remark of SA106. Please advice. For cash basis, i mean reporting of it in receiving period.

Hi,

Bank rewards for switching accounts are taxable income and should be declared on your return as other earned income.

You cannot claim relief on bank charges to maintain your account.

Thank you.

Hi,

Income tax is calculated on the arising basis. Anyone who completes as self employment page (SA103) can choose to use the cash basis or standard accounting practice. We cannot advise which method to use. You may wish to seek advice on this matter from a financial adviser.

Thank you.