Depending on your income level, you may be paying tax on the interest from your savings account when you do not have to. Who qualifies and how can you get your money back through a tax refund?
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If your taxable income is less than your tax-free Personal Allowance then you qualify to register for a tax-free savings account, and you can claim back any taxes you paid previously. Your Personal Allowance is based on your date of birth and total annual income. You can check the HMRC’s chart to figure out your Personal Allowance. Even if your taxable income is slightly above your allowance, you may still qualify for a partial refund. For example, banks usually deduct 20 percent tax from savings accounts. You may qualify for a starting rate of only 10 percent. So, you’ll be able to claim the difference, 10 percent, back. However, it is important that you notify your bank when your
status changes. If your income increases and you no longer qualify for a tax-free or reduced-tax account, the bank will need to increase the tax they are deducting. Otherwise, you’ll receive a tax bill at the end of the year.
How to Get Your Money
To get your refund, you’ll need to fill out a Form R40 (Tax Repayment Form) for each year that you overpaid. The HMRC allows you to claim rebates up to four years back. To register for a tax-free account going forward, you’ll need to fill out a Form R85 for each financial institution. The R85 has a worksheet to help you determine if you qualify or you can visit the HMRC’s online checker.
If you have overpaid, consider using Taxback, a comprehensive tax rebate company. Use our online rebate calculator to easily identify how much you are owed and let us simplify the rebate process for you. Additionally, using a professional firm like Taxback can help you identify other refunds you may have overlooked. Contact us for your tax rebate assessment.