Thousands With Savings Accounts Have Unpaid HMRC Tax – Check Yours

Axel S�rensen

4 min read

Post on May 20, 2025

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Understanding the Personal Savings Allowance (PSA)

The Personal Savings Allowance (PSA) is a tax-free allowance that lets you earn a certain amount of savings interest each year without paying income tax. The amount you can earn tax-free depends on your tax band. Understanding this allowance is crucial to avoiding an unexpected HMRC tax bill. For the current tax year (check the latest HMRC guidance for the most up-to-date figures), the PSA is:

• PSA for basic rate taxpayers: £1,000
• PSA for higher rate and additional rate taxpayers: £500

If your savings income exceeds your personal savings allowance, you’ll need to declare the excess and pay income tax on it. Those not eligible for the PSA, such as higher earners with significant savings income, must declare all their savings interest to HMRC.

Common Reasons for Unpaid HMRC Tax on Savings Interest

Several reasons can lead to unpaid HMRC tax on savings interest, often unintentionally. Many people are unaware of their obligations, leading to overlooked tax liabilities. Here are some common scenarios:

• Multiple savings accounts: Holding savings across various banks or building societies can make tracking total interest earned challenging. The PSA applies to your total interest, not per account.
• Interest exceeding the PSA: Even with careful tracking, if your total interest income from all accounts surpasses your PSA, you'll owe tax on the excess.
• Failure to declare interest: It’s your responsibility to declare all savings interest, even if it's automatically reported by your bank, during your self-assessment tax return.
• Changes in tax codes: Changes in your employment status or circumstances can alter your tax code. If your tax code isn't updated correctly, your savings interest calculations might be inaccurate, leading to underpayment or overpayment of tax.

Failing to declare savings interest has serious implications:

• Penalties: HMRC can impose penalties for late filing and underpayment of tax.
• Interest charges: You’ll likely be charged interest on any unpaid tax.
• Credit rating damage: In severe cases, unpaid tax can negatively affect your credit rating.

How to Check Your HMRC Tax Status Regarding Savings Interest

Checking your HMRC tax status regarding savings interest is straightforward using your online account. Follow these steps:

1. Access your online HMRC account: Visit the HMRC website and log in securely using your Government Gateway credentials.
2. Find your savings interest details: Navigate to your tax return or online account summary. Your bank will typically report your savings interest directly to HMRC, and this information should be visible in your account.
3. Check for outstanding liabilities: Review your tax summary carefully for any outstanding tax liabilities related to savings interest. Look for discrepancies between the interest reported and what you expected.
4. Verify your tax code: Ensure your tax code is correct. Any inaccuracies can lead to incorrect savings interest calculations. Contact HMRC if you need to update your tax code.
5. Contact HMRC for assistance: If you have any questions or discover discrepancies, don't hesitate to contact HMRC for clarification or support.

What to Do if You Owe HMRC Tax on Savings Interest

If you discover you owe HMRC tax on savings interest, act promptly to avoid penalties and interest charges. Here's what to do:

1. Calculate the amount owed: Determine the exact amount of unpaid tax based on your savings interest and tax rate.
2. Pay the outstanding tax: HMRC offers several payment methods:
   • Online payment: The easiest and fastest method, often available through your online HMRC account.
   • Payment by phone: Pay over the phone using a debit or credit card.
   • Paying via post: While possible, this is generally the slowest method.
3. File an amended tax return (if necessary): If you've already filed your tax return and discovered an error, file an amended return to correct the information.
4. Contact HMRC for payment plan options: If you're struggling to pay the full amount immediately, contact HMRC to discuss potential payment plan options.

Thousands with Savings Accounts Have Unpaid HMRC Tax – Check Yours

Many UK taxpayers with savings accounts might have unknowingly accumulated unpaid HMRC tax on interest earned above their PSA. Regularly checking your HMRC account is crucial for accuracy and avoiding penalties. Don't delay—act now to protect your financial well-being. Check your HMRC account today to ensure you're compliant and avoid potential tax liabilities related to your savings accounts. Proactive tax management is key to peace of mind.