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Possible tax windfall for pensioners

Possible tax windfall for pensioners

Category: Savings

Updated: 11/11/2009
First Published: 11/11/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Pensioners who have overpaid tax on their interest from savings would be eligible for a tax windfall, HM Revenue & Customs (HMRC) has revealed.

The news comes as HMRC launches its TaxBack campaign, aimed at encouraging 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 are non-taxpayers.

As part of the initiative, 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.

Banks and building societies are required by law to deduct 20% tax from the interest on everyone's savings before it is paid.

However, pensioners and other savers who are non-taxpayers, or who qualify for the 10% savings rate, will be due a repayment if their savings have been taxed at source.

Claims can be made using HMRC Form R40, while non-taxpayers can also get future savings interest paid gross, without deduction of tax, by filling out Form R85 and sending it to their bank or building society.

"We know times are tough for many pensioners, and we don't want anyone paying tax they don't need to," said Sarah McCarthy-Fry, Exchequer Secretary to the Treasury.

"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".

The letter being sent by HMRC 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.

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