As a higher rate tax payer should I be doing a tax return for declaring interest on savings etc?

[hotmama]

Since I became a higher rate tax payer I have never actually paid 40% tax as my maternity leaves have meant that I actually didn't get enough in the various tax years (I took my full entitlement to no pay leave).

Am now back at work, and will be paying 40% in 2007/08. I don't do a tax return because my job is the only income I get - don't have shares or rental income etc. However, I do have savings which will be taxed but at the basic rate - should I voluntarily be doing a tax return to pay additional tax? Stupid question perhaps - but what happens if I don't?

Any ideas?

I think you will need to do one - but if that's the only extra income you might only have to do a shortened version, although in the first year you might have to do the long one. It will probably trigger one when they see you pay 40% tax.

I was on higher rate tax before having my dd and used to have to fill in a form to cover the interest from savings. I then went below the rate for a couple of years and they stopped sending me a return. I am now back on the higher rate and asked them to send me a return. They wouldn't, as I think that they see it as too much work! However I told them how much I expected to earn in interest and they adjusted my code. I didn't fill anything in - but would prefer to, as I don't think that the coding arrangement is accurate.

It is better to sort things out, as if you don't, you will eventually have to make back-payments covering the unpaid tax and it gets really muddled - I had to about 8 years ago.

This is why you should utilise your cash ISA's if you can, yours and your partners rather than having money in the bank etc. All tax free and you do not declare it.

No idea of the answer to this one. But I can tell you that for the past 6+ years DH has had to do a self assessment. He is not self employed and never has been, he is paid via PAYE and has been in the higher tax band for over ten years. It is odd. It isn't like he can cheat the tax man.

The answer is yes you should do one. Additionally if you have a personal pension for example then you can claim the extra tax relief back and so on.

Hmm, just spoken to DH who says that you wouldn't do it volunatrily unless you think you may get a rebate. Apparently when they get you (and they will), they will NOT backdate it and therefore you will not be hit with a massive tax bill for donkeys years ago..

this accountant agrees with NDP

ChasingRabbits is from the school of creative accountancy.

So what happens then if the Inland Revenue look into your tax affairs and find you have not paid the tax you should have? They will charge you interest on top of what you should have paid as well. I agree the chances of being caught are small.

once they have the payroll end of year returns they will flag you as being higher rate and you should get a tax return next year. if you have massive amounts of other income and therefore tax due they are likely to enquire about previous year, but otherwise they will probably just leave it.
You DO have an obligation to tell them, I was just saying that I probably wouldn't (not that I would advise clients not to )
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Thanks for all of your posts.

I'm fully 'ISAed' up - in the years I was on maternity leave and therefore skint did ISAs for DP.

I work in Local Government so have a good pension and my contributions are made before I pay tax - so don't have to claim any rebate.

Thanks X

you will not need to disclose the income from your savings until after 06/04/08, when you will know exactly how much you got,you could still do isa for you and husband for 2007/08 tax year and further reduce liability