Pensioners could be eligible to reclaim tax

Pensioners could be eligible to reclaim money if they overpaid tax on interest from savings, HM Revenue & Customs (HMRC) announced on Monday.

HMRC launched its TaxBack campaign earlier this year aimed at encouraging pensioners to claim back overpaid taxes on interest from savings and to register for the interest to be paid gross in future.

”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.”

By law, banks and building societies are required to deduct 20 per cent tax from every pensioner or saver’s interest on savings before it is paid.

Non-taxpayers who qualify for the 10 per cent savings rate can reclaim the money if their savings were taxed at 20 per cent.

By filling out Form R85 and sending it to their bank, non-taxpayers can also receive their future savings’ interest paid in gross, without any tax deductions.

For the TaxBack campaign, HMRC will ask around 3.4m Pension Credit recipients whether they have overpaid taxes on their bank interest.

Recipients will receive a letter accompanied by a help sheet that allows them to calculate their annual income and allowances, and determine whether they are owed money.