I'm a pensioner receiving tax bills from HMRC on savings interest - do I really owe it? CRANE ON THE CASE

Now, I've received a letter from HM Revenue & Customs which mentions a fine for late payment of tax on my savings. 

I've paid what the letter asks because I'm not sure what's going on and I'm frightened. 

Speaking to someone seems impossible and I’ve not been offered a face to face opportunity to explain matters to me. In hindsight I wonder if the letters may have been a scam. 

Please can you help me sort this out? T.B., Cambridgeshire 

Bill worries: This reader is concerned about tax notices he has received from HMRC

Helen Crane, This is Money's consumer champion replies: You have found the tax system a nightmare to navigate, not helped by the fact that your health has been poor recently. 

You told me you received different letters from HMRC over several months, telling you that you had tax outstanding. 

Sometimes the amounts on the letters weren't the same. 

This unnerved you because, until now, you had always had your tax calculated and deducted automatically via your tax code. 

Preferring to speak to someone rather than go online, you phoned HMRC to try and clear things up but often faced long waits. 

On several occasions you did manage to get through, and were told that you didn't owe anything. 

However, you say you continued to receive letters which had you thoroughly confused. 

Still unsure about what this tax bill was for, you made a payment of £957 after one of the letters, as you were concerned about what would happen if you didn't. 

After paying this, you became worried you may have been the victim of a scam. 

You were right to be on your guard, as scammers often impersonate HMRC to try and trick people into sending them cash. 

This is when you contacted me, to help you work out what on earth was going on. 

I agree that the self-assessment system can seem complex, especially for those who have never done a tax return before because they have only ever been taxed via Pay as You Earn (PAYE) and never had to sort out their own income tax payments. 

It can be even trickier if, like you, they aren't confident going online. You do have a smartphone and tried the HMRC app, but say you found it a 'nightmare' to use. 

This self-assessment problem could be about to affect many more people. 

The full rate state pension is set to rise to £251 a week and top £13,000 annually from next spring under the triple lock guarantee, bringing it above the income tax threshold for the first time. 

While those who receive the full, new state pension as their only income will be exempt, it means that people earning just £1 from a private pension or savings interest on top of it will need to submit a tax return. 

Those on the old state pension who go over the threshold also won't be excused.  

CRANE ON THE CASE 

Our weekly column sees This is Money consumer expert Helen Crane tackle reader problems and shine the light on companies doing both good and bad.

Want her to investigate a problem, or do you want to praise a firm for going that extra mile? Get in touch:

helen.crane@thisismoney.co.uk

In your case, I was able to contact HMRC to get some clarity on your tax position. 

It also explained your tax situation going forward, which should put your mind at rest.

This began in 2025, when you were sent what's known as a Simple Assessment. 

This is a form people are sometimes asked to fill in if they have underpaid tax by PAYE. 

You had underpaid £1,236.40 of PAYE tax in the 2023-24 tax year but you then paid this, meaning you have no outstanding tax for that tax year. 

In May 2026, you contacted HMRC to check what savings interest you had earned in the 2024-25 and 2025-26 tax years.  

You earned £11,514 in savings interest in the 2024-25 tax year, which means HMRC was right to send you a tax bill.

Tax is usually due on savings interest of £1,000 or more for basic-rate taxpayers, if they have already used up their tax-free allowance of £12,570. 

For higher rate taxpayers, that limit is lowered to £500. 

They will pay income tax at their standard rate, either 20 or 40 per cent, on anything above the threshold. 

There is a further rule to bear in mind for pensioners who have a relatively low income, however.

If your taxable income is below £17,570 per year, including wages or a pension, you can qualify for a tax rate of 0 per cent on up to £5,000 of savings interest. 

This limit is reduced by £1 for every £1 of other taxable income you earn above your personal allowance. 

To add even more complexity, savers also face a further tax hike from April 2027.

In her 2025 Budget, Rachel Reeves unveiled a 2 percentage point increase in the income tax rates applying to savings and property income.

Last month, Chancellor John Healey doubled that rise to 4 percentage points, taking the basic, higher and additional rates to 24 per cent, 44 per cent and 49 per cent.

HMRC receives information from banks and building societies about the savings interest customers receive. If possible, it links this to the taxpayer's record and automatically collects the tax by adjusting their tax code. 

This is what had happened to you in previous years, so you hadn't needed to worry about what taxes you owed. 

However, those who earn savings interest of more than £10,000 are asked to complete a self-assessment tax return and you now fall into that bracket. 

In June 2026, HMRC sent you a letter requesting payment of £957.60 for an outstanding balancing payment for 2024-25.

Balancing payments are the remaining tax you owe for a specific tax year after subtracting any payments you have already made, or that have been deducted automatically. 

You then paid this amount, so HMRC cancelled the late payment penalties it had mentioned in a previous letter. 

As it stands you have a small credit of £71.30.

As you're new to having to file a tax return, I can see why all of this would seem confusing.  

I can also understand why you thought this might be a scam. HMRC's advice is always to access its online services by going directly to the Gov.UK website, where you can also check whether contact details you are given are genuine.

You can report suspicious letters by sending a photo of them to phishing@hmrc.gov.uk. 

The good news is that you don't owe any more for the 2024-25 tax year. However, you will need to complete a self-assessment tax return for the 2025-26 tax year by January 31, 2027.

HMRC thinks you will owe a 'balancing payment' of £942.40 for the 2025-26 tax year which you will need to pay by then. 

The actual figure will be calculated when you file your return, which you have said your daughter is going to help you with. 

HMRC has also put you in contact with its extra support team, which it says will offer a face-to-face visit if you'd like one.