Tax Rebates & Refunds

Could you get tax-free interest on your savings?

October 18, 2012
Posted in Other Tax — Written by Jennifer

You may already know all about tax rebates you can claim if you’ve overpaid tax on income from your job, but did you also know that you could get tax-free interest on your savings too?

Here’s how it works…

According to HMRC rules, almost every UK resident is eligible to earn or receive income of £155 per week before they have to pay tax on earnings. People who earn below this personal allowance limit and who save their money in an interest-earning bank or building society account could unnecessarily be paying tax.

This is because interest on the money in your bank or building society is automatically taxed, meaning that the government automatically takes a percentage of the interest as tax. Unless you tell HMRC and fill in the right form, you could be paying tax on your savings interest when you don’t need to.

Claiming a tax rebate

If it turns out that you’ve been paying tax on your savings interest when you didn’t need to (because you didn’t earn more than the personal allowance limit), you could potentially claim a tax refund worth hundreds of pounds depending on how far back your claim dates.

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