WIREDGOV

Windfall for Silver Savers?

News Release issued by the COI News Distribution Service on 09 November 2009

Pensioners who’ve overpaid tax on their interest from savings could be eligible for a tax windfall, HM Revenue & Customs (HMRC) announced today.

The possibility of some extra money for pensioners comes as HMRC launched its TaxBack campaign, which aims to encourage pensioners who have overpaid tax on interest from savings to claim it back, and register for savings interest to be paid gross in future, if they’re non-taxpayers.

Banks and building societies are required by law to deduct 20 per cent tax from the interest on everyone’s savings before it is paid. But pensioners – and other savers – who are non-taxpayers, or who qualify for the 10 per cent savings rate, will be due a repayment if their savings have been taxed at 20 per cent. Claiming is easy, and can be done using HMRC Form R40.

In addition to claiming any overpaid tax back, non-taxpayers can also get future savings interest paid gross, without deduction of tax, by filling out a simple form (Form R85) and sending it to their bank or building society.

Sarah McCarthy-Fry, Exchequer Secretary to the Treasury, said:

“We know times are tough for many pensioners, and we don’t want anyone paying tax they don’t need to.

“If you think you might have been overpaying tax on your savings, check the figures, and make a claim if you’re eligible.

“If it doesn’t affect you, but you know someone it might – spread the word”.

As part of the campaign, HMRC will be writing to around 3.4 million Pension Credit recipients, asking them to check if they have overpaid tax on their bank or building society interest.

The letter will be accompanied by a helpsheet, which pensioners can use to help them calculate their annual income and allowances and whether they may be due some money back.

For further help and advice about making a claim or registering your bank or building society accounts to receive interest tax-free you can call HMRC on 0845 366 7850 or visit www.hmrc.gov.uk/taxback. You can post your claim form R40 to:

FREEPOST RSCS-LYHX-HUCC
HMRC
Saxon House
1 Causeway Lane
Leicester
LE1 4AA

Notes to Editors

1. Everybody in the UK has a tax-free personal allowance, which is increased when a customer reaches the age of 65. If your total income is less than the allowance, or you should only be paying the 10p savings rate, you could be overpaying tax and you may be due some money back.

2. You can claim overpaid tax that your Bank or Building Society has already taken off by completing an R40 form, available from the HMRC website.

3. The time limit for making a claim is five years from 31 January following the end of the tax year (5 April). For example, the tax year 2003-04 ends on 5 April 2004 so the following January date 31 January 2005. The claim must be made by 31 January 2010.

4. The rate at which your savings income is taxable will depend on how much earnings you receive. If you are a non-taxpayer and your bank or building society has deducted tax you will be due a full refund. But even if you are a taxpayer you may still be due a repayment if you have savings income taxable at the 10 per cent savings rate. If your earnings are less than your personal allowance plus £2320, then some or all of your savings income will be taxable at 10 per cent and you should complete a form R40 to claim some money back.

5. Furthermore, if your income is below your tax-free allowance and hasn’t significantly increased since April 2009, you can have your future interest payments made tax free. To do this you need to fill in form R85 and give it to your bank or building society.

Issued by HM Revenue & Customs Press Office

NAT 79/09 Press enquiries only please contact:

Contacts:

HMRC Out of Hours
Phone: 07860 359544
NDS.HMRC@coi.gsi.gov.uk

Andrew Bennett
Phone: 020 7147 0051
andrew.bennett3@hmrc.gsi.gov.uk

Patrick O'Brien
Phone: 020 7147 2318
patrick.obrien@hmrc.gsi.gov.uk