From October 2025, HMRC will issue Simple Assessment letters for any tax owed on interest earned from banks and building societies between April 2024 and April 2025.
In our latest blog, tax manager, Julie Walsh, explains how these changes could affect you and how to ensure your tax position remains accurate and compliant.
What’s changing?
If you receive bank or building society interest during the 2024–25 tax year, HMRC may send you a Simple Assessment letter showing how much tax you owe.
Some individuals may already have received a Simple Assessment for 2024–25 that did not include interest income. If HMRC later receives updated information from your bank or building society, they may send a second Simple Assessment for the same year to include this interest.
The second letter will show your total tax owed for the year, including any amount from the first letter. If you’ve already made a payment, deduct the amount paid from the new total to calculate what remains due.
Paying tax on savings interest
If you owe tax on savings interest, your Simple Assessment letter will:
- Explain how much tax you owe and why
- Provide details on how to pay
If you’re unsure or would like assistance reviewing your letter, we can help verify your figures and ensure any payments are properly recorded.
Why the figures may differ
You may notice that your tax code or bank statements don’t match the figures shown on your Simple Assessment. This can happen because:
- Some interest is tax-free under your personal savings allowance
- Only taxable interest is included in tax codes
- HMRC may use estimates based on previous data when preparing assessments
Key points to consider
- Automatic reporting – Banks and building societies report the interest you earn to HMRC each year. This may appear on your Simple Assessment even if you didn’t declare it.
- Tax-free allowances: Most people can earn a certain amount of interest without paying tax (personal allowance and personal savings allowance)
- Using your personal allowance: If you haven’t used all of your personal allowance on wages, pensions, or other income, you can apply it to make some, or all, of your interest income tax-free.
- Personal savings allowance: Your allowance depends on your tax band:
- Basic-rate taxpayers: up to £1,000 tax-free
- Higher-rate taxpayers: up to £500 tax-free
- Additional-rate taxpayers: no allowance
- Estimate your tax: HMRC provides an online calculator so you can check roughly how much tax you may owe on your savings interest before paying.
What to do if you disagree with your assessment
If you believe your Simple Assessment is incorrect, contact HMRC within 60 days of the date on the letter to formally dispute it.
If you’re already registered for Self Assessment for that tax year, should contact HMRC to withdraw the Simple Assessment.
How we can help
At PM+M, we can:
- Review your Simple Assessment for accuracy
- Ensure your interest income has been reported correctly
- Calculate any overpayments or underpayments of tax
- Handle communication with HMRC on your behalf
- Prepare or adjust your Self Assessment tax return to reflect the correct figures
If you receive a Simple Assessment letter or have any questions about how these changes affect your savings or tax position, please get in touch with tax manager, Julie Walsh, by clicking the button below.
