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Unless I am not understanding this correctly?
Your understanding looks OK, I suspect either the tax form is not being helpful or you didn't read the notes. The guidance says
"If you complete a Self Assessment tax return, report the extra interest there."
which looks to me like the number you should enter in the box is just the excess over your tax-free allowance. It does seem to take a lot for granted for people in the borderlands of standard/higher rate. This wouldn't happen if we had flat tax.
gbj_tester-
Thanks. I did have a read of the guidance. What confused me was during the "tailor your return" section it asks "Did you receive any interest etc, for example, from UK banks, UK building societies, UK unit trusts?". No mention of the allowance. That gave me the impression you have to enter your interest even if it was below the threshold.
farewell
I'm completing my 2018/19 self assesment, I've earned less than £100 interest from my bank account for that tax year. I have entered my interest figures in the "Untaxed UK interest etc" box.
Now when I finish and go to my tax calculation that interest is added onto my profit from self-employment, then personal tax allowance is subracted from that total.
I assumed it would not be added to my income. I am a basic rate tax payer and thought you could earn £1000 interest before having to pay tax on it? or should I not be declaring any interest as its less than the £1000 allowance?