Wojciech

Diploma for Financial Advisers
Diploma in Accounting
Member of London Institute of Banking and Finance

The answer to “Do banks notify HMRC of savings interest” – Yes, UK banks and building societies notify HMRC of savings interest you earn. They do this automatically at the end of each tax year. This means you don’t need to tell HMRC yourself unless your tax situation is unusual, such as if you earn significant interest from accounts abroad.

Banks report the total interest you’ve earned on savings accounts, ISAs, or other interest-bearing accounts. HMRC uses this information to calculate if you owe any tax. Thanks to the Personal Savings Allowance, many people don’t pay tax on their savings interest. This allowance lets basic-rate taxpayers earn up to £1,000 in interest tax-free, while higher-rate taxpayers can earn up to £500 tax-free. Additional-rate taxpayers don’t have this allowance.

If your savings interest exceeds your allowance, HMRC will adjust your tax code to collect what you owe. In most cases, this happens without you needing to file a tax return.

By notifying HMRC, banks ensure that the tax process is simple for most savers. However, if you’re unsure about your tax situation or have multiple income sources, it’s a good idea to double-check everything.

For more clarity on savings interest, allowances, and taxes, it’s always helpful to seek professional guidance.

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