How does the Taxman know how much is in your bank account?
Are the banks required to disclose this information to HMRC? I regularly make deposits into a savings account from part time jobs, as I am a student. Am I required to disclose this for tax purposes?
United Kingdom - 6 Answers
People Answers, Critics, Comments, Opinions :
Answer 1 :
The Taxman has no idea how much savings you have the bank cannot tell him without a court order when you next get a tax return it will tell you what you do and don't have to declare
Answer 2 :
Banks are legally required to notify HMRC of the interest paid (from which a calculation can be made) and also, unless the account is one that pays interest gross, to deduct tax from the interest at the standard rate and pay it over to HMRC. That is likely to be the position that you are in with your savings account (which will be interest bearing, unlike a current account). If your income for the year is less than the personal allowances, do remember that you can claim it back from HMRC at the end of the tax year.
Answer 3 :
It's the law that you disclose all income. If the IRS obtains a warrant, the bank has no choice but to release your bank records. They also have to report suspicious activity, high amount cash deposits, and interest earned to the government. Don't be a cheat and you have no worries, though.
Answer 4 :
HMRC does not know how much is in your bank account - although deposit takers are required to notify HMRC how much interest has been paid to its depositors each year. If your annual income is over £6035, you have to notify chargeablitiy.
Answer 5 :
HMRC gets notified of the interest you receive on your various bank accounts so can make an educated guess as to how much is in those accounts. If you have built up a large amount without ever declaring any income you can expect enquiries to be made. If all of your taxable income (including taxable interest) is in excess of the annual allowance then you need to pay tax. In practice if your income comes from part time jobs then your employer(s) should be operating PAYE if you earn enough. Talk to them if you are not sure.
Answer 6 :
Banks are legally obliged to notify HMRC of interest paid, but not amount of capital held. HMRC are aware of interest rates, so can make an educated guess. It depends on whether the income from your part-time jobs exceeds the tax free allowance of £6035, the tax year going from 6th April to 5th April. If it doesn't, and your interest added to wages is less than that sum, you can complete form R85, and hand to bank so that interest paid gross. Otherwise bank will deduct tax of 20% at source. If you have done form R85, but earnings exceed £6035, you should notify HMRC, as this will get picked up eventually, and HMRC will arrange for R85 to be cancelled, and tax deducted. If tax deducted at source, you need not do anything, although if your earnings less than tax allowance, you may be due for a refund. In these circumstances, you can claim on form R40.
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