US Savings Interest

Hi all,

I'm asking here as I've received several different answers from HMRC and accountant firms. I earned roughly £30 in savings bank account interest in the US during the 2019 tax year-- do I need to file a self assessment to report it? I've had filing thresholds of £0, £300, and £1000 quoted at me by various people, so not sure what I should do. Any help would be greatly appreciated!

Is the £30 foreign interest your only foreign income? Was tax withheld in the US?

Have a look at the HMRC Self Assessment Help Notes for 2019. It states:

5 Foreign
Use the ‘Foreign’ pages if you received:
• interest (over £2,000) and income from overseas savings – if your only foreign income was untaxed foreign interest up to £2,000, you can put this amount in box 3 on page TR 3 of your tax return instead of completing the ‘Foreign page’ (see page TRG 5)
[Bold Mine, found on page TRG 3 of the notes]]

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/787630/SA150_2019.pdf

Yes, that is my only overseas income. I've seen that guidance, but the guidance for the self assessment presumes you need to file a self assessment, and  the guide to determine whether or not you need to file a self assessment (https://www.gov.uk/check-if-you-need-tax-return [nofollow] ) rather unhelpfully asks "Do you need to pay tax on income from outside the UK?", which is the relevant question. From various sources:

"Whether you need to pay depends on if you’re classed as ‘resident’ in the UK for tax. If you’re not UK resident, you will not have to pay UK tax on your foreign income. If you’re UK resident, you’ll normally pay tax on your foreign income. But you may not have to if your permanent home (‘domicile’) is abroad." (https://www.gov.uk/tax-foreign-income [nofollow] ) I'm here on a spousal visa and this is my first year in the UK -- my inclination would be that I am not domiciled in the UK, but I am not sure.

"Tax if you’re non-domiciled. You do not pay UK tax on your foreign income or gains if both:

• they’re less than £2,000 in the tax year
• you do not bring them into the UK, for example you transfer them to a UK bank account

If this applies to you, you do not need to do anything." (https://www.gov.uk/tax-foreign-income/non-domiciled-residents [nofollow] )

One of the accountants I spoke to also claimed that because I paid tax on it in the US, it would fall under my standard Personal Savings Allowance of £1000 (https://www.gov.uk/apply-tax-free-interest-on-savings [nofollow] ) and therefore I would not need to file a return.

This seems like a fairly straightforward question, so I'm hoping someone here has experienced something similar -- I've been very surprised by the variety of answers I've gotten.

My understanding is if you wish to claim non-Dom (remittance basis) status, you must file a self assessment tax form .  My understanding also is if you are uk resident and claim non- Dom status, you lose your personal allowance if  your income is over £2,000.

Perhaps others may have a far better insight to your question. You may also want to read about the UK Statutory Residence Test ( SRT).

edit to add:
It would be most unusual for someone to claim the remittance basis ( non-Dom ) for foreign income of only £30. £300,000 foreign income maybe, but not £30. If the £30 was your only income, it would be far below the personal allowance of £12,500 (2019/20) and therefore there is no tax due and no need to file any UK return.

Sorry if I was unclear -- the 30 quid is not my only income, it's my only source of foreign income. My normal salary earned in the UK is taxed under PAYE.

I do understand your question now - "Is there a tax free threshold for declaring foreign interest?"

35 years ago there was obvious official guidance for a tax free amount of foreign interest (£100 or so?) but I haven't seen that guidance for a number of years although I haven't combed the current guidance minutely. Perhaps someone can point it out if it still exists.

Establish if you are resident for tax by reading the Statutory Residency Test.
https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt/guidance-note-for-statutory-residence-test-srt-rdr3
If, under SRT, you are non-resident, you may have options as to what you have to declare to HMRC. The number of days present in the UK is the determiner and can vary from 16, 30, 31, 46, or 183 days. There are 'split year' allowances.

Don't confuse the mention of non-residence via the SRT, on the GOV.UK sites, with non-dom status (remittance basis) for non-UKC Americans. They're two different things. If you have UK earned income, being taxed on a non-dom basis will restrict your UK Personal Allowance which means you will pay more tax on that UK income. Avoiding the "Arising Basis" (taxed on worldwide income) is usually not worth it unless the foreign income is somewhat substantial in relation to your UK income.

HMRC has tightened the rules on tax free income such as the 10% tax free amount for foreign pensions and, in spite of the PR from the government, is requiring more and more taxpayers to file the Self Assessment form. The self assessment form is actually very easy for most to complete and in no way is anything nearly as complicated as a US 1040 form. It usually takes me much less than an hour to complete mine including calculations, and I do mine the old fashioned way of pen and paper. All you do is fill in the relevant boxes where they apply. In your case (£30 foreign interest) you probably don't need the 'Foreign Pages', so even simpler. There is commercial software available as well as the HMRC filing Self Assessment site.

 

Sorry if I was unclear -- the 30 quid is not my only income, it's my only source of foreign income. My normal salary earned in the UK is taxed under PAYE.

I would contact HMRC and ask.

First try here, which is for PAYE folks. (I have an HMRC account, have done for years as I keep track of my NI contributions, and it is, or was, easy to set up).
https://www.gov.uk/check-income-tax-current-year

tell HM Revenue and Customs (HMRC) about changes that affect your tax code

...or contact them from here
https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

£30 in foreign interest may well be reportable, but if you are in the 20% tax bracket that is only £6 in tax or £12 if in the 40% bracket.  For HMRC to process a self assessment it is going to cost THEM a lot more than £12 plus a load of hassle for yourself. Hear what they say first rather than guessing what they want. Because the sums are so small you could ignore it and not report but if they find out, then the penalty for not reporting could be high so I would let them know.