£250m Pounds Worth of Savings Tax Left Unlclaimed
The Inland Revenue has announced it has taken £250m extra tax off people’s savings and it wants to pay it back.
Most of the people owed the money are on a low income and should not pay tax at all.
But 20% tax is automatically deducted by banks and building societies from interest earned on savings.
The Revenue is encouraging low income people with savings to check their statements and claim back any tax they are owed.
Claire Merrils of HM Revenue & Customs told Money Box on Radio 4,
“We think there is now about £250m of tax and up to three million people entitled to a share of this money.
“We know that there are a lot of pensioners who need every penny.
“So if they want their money back please claim it because it’s yours.”
There are two groups of people that may be paying too much tax.
The first group are those whose income is below the tax allowance.
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They should not be paying tax at all and can register to have it paid gross in future.
The personal tax allowance in 2008/09 is £6,035 for everyone under 65.
Older people can have £9,030 a year before paying tax and those aged 75 or more can have up to £9,180.
To qualify for the higher amount your birthday can be as late as 5 April 2009.
Claire Merrills explained what to do.
“People need to add up all their income together, pensions and so on, including the income from those bank or building society accounts.
“If the total is less than their allowance they need to fill in form R85 so they don’t get tax taken off.
“They should also contact us and we can send them a form – an R40 – and you do need one for each tax year but you can claim back to 2002/03.”
An extra 10%
The second group cannot have their income paid gross but must claim back overpaid tax.
Their income is above their personal allowance but within £2,320 of it.
Their interest should then be taxed at just 10%.
So they can reclaim the extra 10% which has been over-deducted also using form R40.
Because this is all very complicated the Revenue has two helplines.
Call 0845 980 0645 about registering to have interest paid gross.
And call 0845 366 7850 about claiming overpaid tax back.
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