HMRC Simple Assessments for Bank and Building Society Interest
HMRC is sending Simple Assessment letters for tax owed on bank and building society interest earned between April 2024 and April 2025. This update is part of HMRC’s ongoing move toward a more streamlined tax system.
Many people may be unaware that they could owe tax on the interest payments and need to declare the interest their savings earn. This is especially true for employees who are accustomed to having their tax liability deducted at source through their employer’s payroll system.
The current limits for 0% tax on interest are £1,000 for a basic rate taxpayer and just £500 for a higher rate taxpayer. If you haven’t used your Personal Allowance on other income (such as salary or pension), you can apply it to your savings interest.
You can use HMRC’s online calculator to check how much tax you might owe on savings interest.
Simple Assessment Letters
Some people may have already received a Simple Assessment for the 2024–25 tax year, however it may not have included all their savings interest.
If HMRC receives additional information from banks or building societies, it may issue a second Simple Assessment letter for the same tax year. This updated letter will show the total tax owed for the year, including any amounts shown in the first letter. If part of the total owed has already been paid, this payment should be deducted to see how much – if anything – remains outstanding.
How to pay your Simple Assessment
Your Simple Assessment letter will explain how much you owe and why. You can find full guidance on how to pay your tax bill at GOV.UK.
HMRC has created a step-by-step YouTube video explaining how the Simple Assessment process works.
Why the figures might not match
The figures on your tax code, bank statements and HMRC letters may differ slightly. This can happen because:
- Some interest may be tax-free under your Personal Savings Allowance
- Only taxable interest appears in your tax code
- HMRC may use estimates based on recent data
More Information
You can read more about Simple Assessment and check your personal tax account to see your current position via GOV.UK’s Simple Assessment page.
If you believe your Simple Assessment is incorrect, you need to contact HMRC within 60 days of the letter’s date to dispute it.
If you’ve already registered for Self Assessment for that tax year, call HMRC on 0300 200 3300 to withdraw the Simple Assessment.
Help is Available
‘Tax changes like this can seem minor, but they often catch people off guard, especially when savings interest rates increase,’ says Karen Bunyan, Partner and Chartered Certified Accountant with Hargreaves Owen in Halls Green, located near Baldock, Letchworth and Hitchin.
She adds: ’If you receive a Simple Assessment letter and are unsure what it means, we’re here to help. We can review the figures, confirm what’s been paid, and make sure everything is handled correctly with HMRC.’
The tax experts at Hargreaves Owen are available to ensure clients’ savings interest is reported accurately. If you’d like to know more, please contact us. Let’s have an initial chat without obligation.