Latest news with #HMRevenue&Customs
Glasgow Times
24 minutes ago
- Business
- Glasgow Times
Nationwide, NatWest, Lloyds customers issued HMRC warning
Experts have explained that Brits with long-term fixed-rate savings accounts might get an unwelcome knock on the door from HMRC. A lot of banks nowadays offer two or three-year fixed savings accounts as a way to grow your funds. But while you're counting the cash at the end of the term, you could be hit with a tax demand because HMRC views the interest from these accounts as income within a single year. Got a #sidehustle? 💸 We're here to help you get your tax right. ✅ Click below to check if you need to tell us about your side hustle income today. ⬇️ — HM Revenue & Customs (@HMRCgovuk) June 4, 2025 For some savers, the final payout could nudge them over the tax-free threshold, triggering a tax event. However, it's key to remember that this doesn't apply to cash ISA accounts, which remain tax-free up to £20,000. The current tax-free interest earnings cap for basic-rate taxpayers sits at £1,000 annually. Those on the higher-rate can pocket up to £500 without owing tax, but additional-rate taxpayers aren't afforded any tax-free interest allowance. Laura Suter, personal finance director at AJ Bell, told the Star: "Many people won't realise that [fixed rate accounts] could leave them with a tax headache in the future." She added: "You are taxed on the interest on your savings when it is accessible by you. "So if you pick a fixed-rate savings account that pays out all the interest at maturity, for tax purposes all of that interest will be counted in one tax year. Recommended reading: "This means that the interest from just one account could take you over your Personal Savings Allowance on its own." Ms Suter suggested getting an account where interest is paid out monthly or annually instead. She continued: "This means it is spread across different tax years. "Or you can opt for a fixed-term ISA savings account, where you won't pay any tax on the interest."
The Herald Scotland
3 hours ago
- Business
- The Herald Scotland
Nationwide, NatWest, Lloyds customers issued HMRC warning
A lot of banks nowadays offer two or three-year fixed savings accounts as a way to grow your funds. But while you're counting the cash at the end of the term, you could be hit with a tax demand because HMRC views the interest from these accounts as income within a single year. Got a #sidehustle? 💸 We're here to help you get your tax right. ✅ Click below to check if you need to tell us about your side hustle income today. ⬇️ — HM Revenue & Customs (@HMRCgovuk) June 4, 2025 For some savers, the final payout could nudge them over the tax-free threshold, triggering a tax event. However, it's key to remember that this doesn't apply to cash ISA accounts, which remain tax-free up to £20,000. The current tax-free interest earnings cap for basic-rate taxpayers sits at £1,000 annually. Those on the higher-rate can pocket up to £500 without owing tax, but additional-rate taxpayers aren't afforded any tax-free interest allowance. Laura Suter, personal finance director at AJ Bell, told the Star: "Many people won't realise that [fixed rate accounts] could leave them with a tax headache in the future." She added: "You are taxed on the interest on your savings when it is accessible by you. "So if you pick a fixed-rate savings account that pays out all the interest at maturity, for tax purposes all of that interest will be counted in one tax year. Recommended reading: "This means that the interest from just one account could take you over your Personal Savings Allowance on its own." Ms Suter suggested getting an account where interest is paid out monthly or annually instead. She continued: "This means it is spread across different tax years. "Or you can opt for a fixed-term ISA savings account, where you won't pay any tax on the interest."
The Herald Scotland
6 hours ago
- Business
- The Herald Scotland
HMRC is urging anyone with kids aged 15
For someone with 13 missing years, who lives for another 20 years, it can be worth as much as £100,000 or more in State Pension payments. If you became a parent before May 2000, you may have Home Responsibilities Protection (HRP) missing from your National Insurance record. This could mean you're missing out on State Pension payments. Check if you can apply for HRP below. ⬇️ — HM Revenue & Customs (@HMRCgovuk) May 19, 2025 What is Home Responsibilities Protection? Home Responsibilities Protection (HRP) was given for full tax years (6 April to 5 April) between 1978 and 2010, if any of the following were true: you were claiming Child Benefit for a child under 16 you were caring for a child with your partner who claimed Child Benefit instead of you you were getting Income Support because you were caring for someone who was sick or disabled you were caring for a sick or disabled person who was claiming certain benefits National Insurance credits for parents and carers replaced HRP from 6 April 2010. Who qualified automatically for HRP? Most people got HRP automatically if they were: getting Child Benefit in their name for a child under the age of 16 and they had given the Child Benefit Office their National Insurance number getting Income Support and they did not need to register for work because they were caring for someone who was sick or disabled If your partner claimed Child Benefit instead of you, you may be able to transfer HRP from a partner you lived with if they claimed Child Benefit while you both cared for a child under 16 and they do not need the HRP. If you reached State Pension age before 6 April 2008, you cannot transfer HRP. HRP for caring for a sick or disabled person If you spent at least 35 hours a week caring for someone with a long-term illness or disability between 6 April 1978 and 5 April 2002, you may also be able to claim. They must have been getting one of the following benefits: Attendance Allowance Disability Living Allowance at the middle or highest rate for personal care Constant Attendance Allowance The benefit must have been paid for 48 weeks of each tax year on or after 6 April 1988 or every week of each tax year before 6 April 1988. If you were getting Carer's Allowance You do not need to apply for HRP if you were getting Carer's Allowance. You'll automatically get National Insurance credits and would not usually have needed HRP, but check - just to be sure. Recommended reading: If you were a foster carer or caring for a friend or family member's child You can also apply if, for a full tax year between 2003 and 2010, you were either: a foster carer caring for a friend or family member's child ('kinship carer') in Scotland All of the following must also be true: you were not getting Child Benefit you were not in paid work you did not earn enough in a tax year for it to count towards the State Pension Married women or widows You cannot get HRP for any complete tax year if you were a married woman or a widow and had chosen to pay reduced rate Class 1 National Insurance contributions as an employee (commonly known as the small stamp), or you had chosen not to pay Class 2 National Insurance contributions when self-employed
Yahoo
a day ago
- Business
- Yahoo
HMRC bills workers for tax it abolished last year
HM Revenue & Customs (HMRC) has accidentally billed workers for a tax that was abolished last year. Class 2 National Insurance (NI) contributions were effectively scrapped for self-employed people in April 2024. However, workers have reported that HMRC is still adding the levy of £179.40 to their tax bill despite now being exempt. Some have been told to pay twice this amount – £358.80. Experts said it was 'ridiculous' that HMRC was getting self-employed NI calculations wrong when it was quick to fine workers for errors navigating the 'complex' tax system. A source told The Telegraph there were indications the problem was 'very widespread'. HMRC said it was 'working urgently' to resolve the issue. The reason for the error is unknown, but the problem is understood to have arisen as a result of the changes announced in the autumn 2023 Budget that came into effect for the 2024-25 tax year. The rule change means self-employed workers now receive a credit for Class 2 NI, which boosts entitlement to 'contributory' benefits such as the state pension, as long as their profits are above £6,725. As a result, they do not need to pay Class 2 NI, but can still use the credit to improve their entitlements. Anyone with profits below £6,725 can opt to pay the tax voluntarily at a rate of £3.45 per week, adding up to £179.40 a year. The Association of Taxation Technicians (ATT), a professional body for the tax compliance industry, said its members had reported receiving one of three letters containing errors from HMRC. The first said the Class 2 NI tax sum had been 'amended' to zero, which made the letter unnecessary. The second wrongly demanded £179.40 in tax, while the third demanded twice this amount. Michelle Denny-West, a tax partner with accountancy firm Moore Kingston Smith, said: 'The National Insurance Contribution (NIC) system for self-employed individuals has always been confusing, but the fact that HMRC cannot get this right is ridiculous. 'It's frustrating that taxpayers are expected to navigate such a complex tax system and can be charged penalties and interest for mistakes – yet they are now also expected to correct HMRC's mistakes. 'The risk here is that some individuals will unwittingly pay the additional NICs without realising it's a bill they should not be paying.' Helen Thornley, of the ATT, said: 'Our members have reported a number of problems with national insurance calculations for 2024-25. Most self-employed individuals are not required to pay Class 2 contributions following changes announced at last year's Budget. 'However, many have received letters from HMRC which have added charges of almost £180 in Class 2, and in some instances double that amount. 'We have reported all examples to HMRC, who have assured us that this is being investigated 'as a matter of urgency'. 'However, it is still not clear what the reason behind the issue is. In the meantime, anyone affected should contact HMRC to ask for a resolution.' An HMRC spokesman said: 'We apologise to those affected and we're working urgently to resolve this issue.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Yahoo
a day ago
- Business
- Yahoo
HMRC bills workers for tax it abolished last year
HM Revenue & Customs (HMRC) has accidentally billed workers for a tax that was abolished last year. Class 2 National Insurance (NI) contributions were effectively scrapped for self-employed people in April 2024. However, workers have reported that HMRC is still adding the levy of £179.40 to their tax bill despite now being exempt. Some have been told to pay twice this amount – £358.80. Experts said it was 'ridiculous' that HMRC was getting self-employed NI calculations wrong when it was quick to fine workers for errors navigating the 'complex' tax system. A source told The Telegraph there were indications the problem was 'very widespread'. HMRC said it was 'working urgently' to resolve the issue. The reason for the error is unknown, but the problem is understood to have arisen as a result of the changes announced in the autumn 2023 Budget that came into effect for the 2024-25 tax year. The rule change means self-employed workers now receive a credit for Class 2 NI, which boosts entitlement to 'contributory' benefits such as the state pension, as long as their profits are above £6,725. As a result, they do not need to pay Class 2 NI, but can still use the credit to improve their entitlements. Anyone with profits below £6,725 can opt to pay the tax voluntarily at a rate of £3.45 per week, adding up to £179.40 a year. The Association of Taxation Technicians (ATT), a professional body for the tax compliance industry, said its members had reported receiving one of three letters containing errors from HMRC. The first said the Class 2 NI tax sum had been 'amended' to zero, which made the letter unnecessary. The second wrongly demanded £179.40 in tax, while the third demanded twice this amount. Michelle Denny-West, a tax partner with accountancy firm Moore Kingston Smith, said: 'The National Insurance Contribution (NIC) system for self-employed individuals has always been confusing, but the fact that HMRC cannot get this right is ridiculous. 'It's frustrating that taxpayers are expected to navigate such a complex tax system and can be charged penalties and interest for mistakes – yet they are now also expected to correct HMRC's mistakes. 'The risk here is that some individuals will unwittingly pay the additional NICs without realising it's a bill they should not be paying.' Helen Thornley, of the ATT, said: 'Our members have reported a number of problems with national insurance calculations for 2024-25. Most self-employed individuals are not required to pay Class 2 contributions following changes announced at last year's Budget. 'However, many have received letters from HMRC which have added charges of almost £180 in Class 2, and in some instances double that amount. 'We have reported all examples to HMRC, who have assured us that this is being investigated 'as a matter of urgency'. 'However, it is still not clear what the reason behind the issue is. In the meantime, anyone affected should contact HMRC to ask for a resolution.' An HMRC spokesman said: 'We apologise to those affected and we're working urgently to resolve this issue.'
