Paying tax on Nationwide Fairer Share Payment

[Pessimist]

Does anyone know how tax on fairer share payment works? They say they report the payment to HMRC - so do I have to do anything to make sure HMRC taxes me? Or does HMRC just work out that my income is my job plus this very random £100 and they'll automatically sort the tax on the rest of my income accordingly (I.e. 20% of £100 spread over the year?)

My tax affairs are otherwise pretty straightforward - one PAYE full-time job at the 20% band.

As far as I understand it basic rate tax payers can earn up to £1000 in interest tax free. Nationwide fairer share payment counts as interest on savings. So we don't have to do anything or pay anything

Ooh, thanks! They've phrased it very strangely and the FAQs make it sound like we need to pay tax on it. Weird!

It's taxed as if it were interest, so usual zero rate bandings etc apply

Well you would have to pay tax on it if your total savings for the tax year earn you more than £1000 interest so they need to inform you of that. They won't know everyone's individual savings amount. It's not weird, it is absolutely standard.

I thought building societies used to deduct tax before they paid you the interest?
Is this different or has it changed?
I remember there was a form to fill in to claim back the tax if you were a non tax payer.
That's one reason I liked building societies rather than banks for savings. I didn't have to worry about it.
I never did claim anything back even though I could. I rather have less stress than every last penny.

Some people will have to pay tax on it, and the weird wording os because it's not up to them to give financial advice or to work out which savers need to take action.

If someone's entire income is from savings and investments, or they are already getting over £1000 per year in savings interest, then they do have to pay tax on the extra.

HMRC changed the rules around a decade ago. Since then all interest is paid gross and it's up to the taxpayer to pay tax if liable.

That stopped in 2016. It is now paid gross and is the responsibility of the individual.

The FAQs actually have a link to an explanation about the tax.

The banks report the interest to HMRC and will alter your tax code to pay any owing. You don't have to do a self assessment if it's under £10k. If you are not on PAYE you will get a letter to pay the tax owed if not SA. I will have to pay 20% tax on mine as my interest is quite high this year due to a couple of bonds I had with the Nationwide. Obviously check that this has happened, I think it's usually about October or November you get notified.

Thanks everyone - wish I could delete the thread. The notice I had in my account this morning was quite vague and didn't make it clear that it's treated as interest (so have a £1000 limit), but a different page on the website does.

As you were! Thanks all.

HMRC are difficult to communicate with though.
I know of a situation concerning inheritance tax.
Initially the executors were told via solicitor that they had to pay 110K.
Solicitor said they could pay 11K and then staged payments.
They decided to 33K immediately to show good faith.
Solicitor ceased trading.
Then came pandemic.
E ecutor rang HMRC to explain re solicitor no longer involved and to please deal with executor directly at home address.
HMRC took note of this then continued reading the file and said there had been an error re IHT.
That no IHT was payable and they would be writing to executor and repaying.
Pandemic rambled on. No letter came.
Eventually executor engaged another solicitor to complete probate.
That solicitor also had difficultly getting response from HMRC.
After much delay and repeated requests they issued certificate stating there was no outstanding tax payable by that estate.
Executor wondered about previous statement from HMRC during phone call 2years earlier. But had no proof of what was said.
So it seemed strange. The value of the estate had not changed or been in dispute.
Based on previous dealings with HMRC either they owed 110K in total or 1110K minus 33K already paid.
Or they owed nothing and should be repaid the 33K.
But the whole thing was taking so long even with involvement of new solicitor that it seemed better to accept the situation and proceed with probate.
Despite having paid 33K.
That either was not due to be paid at all.
Or was a third portion of 110K that was due.
Executor has wondered if he should try look into it aga.
But there is the slight fear that since no one could follow their reasoning throughout HMRC might say well you still owe us 2 thirds of 110K.
Despite their have issued certificate the estate was free of tax liability.

As is obvious. I couldn't advise anything
.

I realise my fractions are not right.
It's not a third. But the figures were 110 tax to be paid. Initially.
33 paid immediately.
Nothing further paid.
Or requested by HMRC.

Anyone in the biz or with a natural bent for this kind of thing
Any ideas? Thanks.

Hi - this is probably best put in a separate thread - my question was answered so don't imagine people will scroll down far enough to see your post.

Spot on (except my letter usually arrives in August - perhaps they're staggered?).