PAY LESS – OR NO – TAX IN 2011!

Only half the population pays income tax – or should do. Children, students, non-working adults, low paid workers and many retired people have an income too small to pay tax. But if they have savings then the bank and building society automatically deducts 20% basic rate tax from any interest earned and passes it to Her Majesty’s Revenue & Customs. Don’t blame them – it’s the law. But there is a way round it.

If your income is too low to pay tax you just fill in a form called R85 – download it here http://www.hmrc.gov.uk/forms/r85.pdf and your interest will be paid gross in future without tax being deducted.

If you have paid tax in previous years but should not have then you can claim it back for the past six tax years to 2004/05. But do it before 31 January or you will only be able to go back to 2005/06. You need to fill in a form called R40. It looks a bit daunting but don’t be put off, just fill in the bits that apply. And you must do one for each tax year that you are reclaiming. You can find advice and links to the form here www.hmrc.gov.uk/taxback.

HMRC has estimated that it holds more than £200 million of wrongly deducted tax. So get yours back now – it is your money not George Osborne’s!

Check your annual income against the figures in the table for your age. If your income is less than the amount shown you will get all or some of your savings tax back. If you are registered blind add the amount in the last column.

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