Due to improvements in data received from banks and building societies, HMRC is increasingly able to identify individuals whose interest income exceeds £10,000.
As a result, HMRC has automatically registered some individuals for Self-Assessment and have issued notices requiring a 2024/25 tax return to be filed.
Whilst the standard deadline for filing a Self-Assessment tax return is 31 January following the end of the tax year (31 January 2026 for 2024/25), where a notice to file is issued after 31 October, the filing deadline becomes 3 months from the date of the notice.
If you believe you have incorrectly received a notice to file a 2024-25 (or 2025-26) Self-Assessment tax return based on your savings income, you should contact HMRC to have this reviewed.
Keeping track of your annual interest income is important – not only to determine whether a tax return may be required, but also to ensure that any tax collected outside of Self-Assessment (for example via a PAYE coding adjustment or Simple Assessment) is calculated correctly.
Whilst unexpected correspondence from HMRC can arise from genuine tax obligations, it is also important to be aware of potential scams. If you are unsure why you have received a notice, or have concerns about its authenticity, you should contact HMRC directly using official contact details.
Your questions answered
What are the tax obligations on savings interest?
Interest is taxed as savings income at your marginal income tax rate (20%, 40% or 45%).
Your personal savings allowance (PSA) is calculated based on your tax band (i.e. £1,000 for a 20% taxpayer decreasing to £500 for a 40% taxpayer). Additionally, your personal allowance (£12,570) can also be used against your savings income. If certain conditions are met, sometimes your PSA might be £5,000.
Do I need to complete a Self-Assessment return on my savings?
Not always. HMRC usually collects tax on savings income via your PAYE tax code or by issuing a Simple Assessment. However, you will probably have to complete a Self-Assessment Tax Return if your interest is over £10,000; or if you receive a notice to file a tax return.
How does HMRC know about my savings income?
Banks and building societies report interest directly to HMRC. This information is used to adjust tax codes, issue Simple Assessments and identify individuals who may need to file a Self-Assessment tax return. Whilst this information has been provided for years, HMRC have recently changed how this data is used – this is why people are now receiving unexpected notices to file.
