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Saturday, 6 March 2010

Getting results: top taxman replies with advice for older savers

I have had a reply to my email to Dave Hartnett, the Permanent Secretary for Tax. I had emailed Mr Hartnett after a Parliamentary report had warned that some older people could be paying too much tax on their savings income. I asked Mr Hartnett for advice on what older people in Hendon should do if they fear that they might be affected by this problem. There is no way that anyone should have to pay more tax than they rightfully owe. I am most grateful to Mr Hartnett for swiftly responding with the advice that I asked for, which I am pleased to pass on via this website.

Mr Hartnett's email reads:
Dear Mr Harris

Thank you for your e-mail of 28 February asking for guidance for older people who think they might be paying too much tax on their savings.

Bank and building society interest is taxed under the Taxation Deduction Scheme for Interest (TDSI) where banks and building societies automatically deduct tax at 20%. In most cases this gives the correct result but non-taxpayers and taxpayers who qualify for the 10% savings rate can pay too much tax and be due a repayment.

HMRC has undertaken a series of “Taxback” campaigns to encourage those who are overpaying tax on their bank and building society interest to claim it back and for non-taxpayers to register to receive future interest payments without tax deducted. The most recent Taxback campaign took place in Autumn 2009 and so far has paid back almost £2m to predominately older taxpayers.

Individuals who are concerned that they may have overpaid tax on their savings income can consult the section on “Getting tax-free interest on savings or claiming tax back” on our website at http://www.hmrc.gov.uk/incometax/tax-free-interest.htm. This explains how savings interest is taxed and how to reclaim any tax they may have overpaid.

Savers who are not liable to tax can receive their interest gross by completing a Form R85 which they then give to their bank or building society. This form and its Helpsheet are available from the HMRC website (link above) or from banks or building societies, and some will allow savers to arrange to receive gross interest over the telephone. Taxpayers who have overpaid tax can reclaim this by completing the Form R40 which can be obtained (along with its Helpsheet) from the HMRC website or from any Tax Office.

In addition to the above resources savers can get help about registering their accounts for gross interest from our Registration Helpline on 0845 980 0645. This is open from 8.00 am to 5.00 pm Monday to Friday (not including Bank Holidays).

I hope that you will find this information helpful.

Dave

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