I’ve recently paid to have my self-assessment completed by Crunch, and this has now been filed with HMRC. I just have one query…
One of the items I had to declare on the Crunch questionnaire was how much untaxed interest I had received on bank/building society/savings accounts.
My understanding is that, as a lower tax rate earner, the first £1,000 of any interest earned is tax free, but no tax is deducted at source by the banks/building societies, therefore I owe tax on any interest above £1,000 that I receive.
Let’s assume I earned £5,000 in interest. I declared £5,000 on the Crunch questionnaire as ‘untaxed interest’. But looking at my tax calculation, the full £5,000 has been added to my taxable income. Surely only £4,000 should have been added, to allow for the first £1,000 tax-free?
As a sole trader, I also receive a £1,000 trading allowance, but my understanding is that I am entitled to this in addition to the personal savings allowance on interest.
Could someone please advise? Thanks.
