Why a simple form could save some readers thousands
It is important that we all pay tax, but it is also important to make sure we pay the right amount of tax for our circumstances. If you are aged 65 or over, you may be paying more tax than you need to on your savings, without even realising it.
Those aged 65 or more in the current tax year (2012/3), which ends at midnight on 5 April 2013, are exempt from paying tax on money they have in savings accounts if their total annual income doesn’t exceed £10,500. That means any money they have coming in from work, savings interest, benefits, pensions and any rent.
You may be paying more tax than you need to on your savings, without even realising it…
People who are 75 or older in the 2012/3 tax year can earn a total of £10,660 before owing any tax on their savings pot. So it is worth doing some sums if you fall into one of these categories.
To receive interest gross, savers need to fill in a form R85, available from Her Majesty’s Revenue & Customs (HMRC) or their bank or building society. Most banks and building societies will refund any tax already deducted from interest paid in the current tax year. But consumers can also reclaim overpaid tax for the preceding four years. These claims must be sent to HMRC. So if you submit your claim before 5 April 2013, you can claim for any overpayments in tax made since the 2008/9 tax year.
It is worth doing some sums if you fall into one of these categories…
Even if your income tips over the £10,660 threshold, all may not be lost. If you are over 65 and your total income is below £13,210 in the current tax year, you may still be able to claim some of the tax you’ve paid on your savings back. This is because you qualify for a special 10 per cent tax rate on any income from your savings pot.
This also applies to savers who are 75 or older if their total income falls below £13,370. If this applies to you, you need to fill in a form R40, which can be downloaded directly from HMRC’s website and sent to them for processing.