Tax threat for thousands of unaware savers who haven’t paid enough on interest payments

The taxman has been accused of sending alarming letters to savers over Christmas.

HM Revenue & Customs sent out 10,000 letters warning taxpayers they may have underpaid and reminding them they faced penalties for errors.

The letters asked them to ‘reconsider’ the amount of interest they had declared on their savings on their 2014-15 tax return.
HMRC insists it only wrote to taxpayers where it had ‘solid information’ from banks and building societies that suggested they had undeclared interest on their tax returns.

But accountants claim innocent tax-payers have been targeted.

George Bull, a senior tax partner at RSM, says: ‘We have spoken to three senior people at HMRC and they say names are selected at random and they have no evidence of interest being omitted or owed.

‘Many people are worried and are phoning HMRC or their accountants to ask what has gone wrong. ’

The warning comes just before the January 31 deadline for filing self- assessment tax returns for the 2015-16 financial year.

Thousands who informally rent out their homes through sites such as Airbnb are believed to be unaware they must declare the income and are at risk of fines.

Taxpayers who rent out their homes for the occasional night or who make a few thousand pounds from hobbies could have to pay tax on their incomes.

HMRC says the letters were part of a one-off exercise and had prompted some to declare additional interest.

But the taxman has been accused of making huge blunders calculating how much interest savers are earning because it is basing its estimates on previous years.

Basic-rate taxpayers can earn £1,000 of interest a year tax-free.