Tax Rebates & Refunds

Are you eligible for tax-free interest on your savings?

November 25, 2012
Posted in Other Tax, Tax Rebates — Written by Geoffrey

Most people pay tax to the government on the interest their savings accrue in a bank or building society account. A total of 20 per cent in tax is deducted from savings held in UK bank accounts.

However, there are certain exceptions which may mean that you don’t have to pay tax on savings interest and which may even mean that you are owed a hefty tax rebate.

If your earnings are lower than your Personal Allowance, which is the amount you can earn in a tax year without having to pay tax on your income, the interest on your savings may be tax-free. You need to let HMRC know if this is your situation, so you can register for tax-free interest on savings and receive a tax rebate for money you’ve paid so far.

To find out if you are eligible, follow these steps:

1. Work out if your earnings are less than your Personal Allowance. Use the figures on the HMRC website to find out Personal Allowance limits and compare this with your earnings.

2. Check bank statements or contact your bank to find out whether you’ve been paying tax on savings interest.

3. If you earn less than your Personal Allowance and you have been paying tax on savings interest, you need to contact HMRC to register for tax-free savings

4. You may also need to file a tax rebate claim to recoup tax you’ve paid on savings interest unnecessarily.

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