It's estimated that some 2.4 million older people could be owed about £200m in tax because they haven't registered to have interest on their savings paid tax free. So how has this situation come about?
Banks and building societies are required by law to deduct 20 per cent tax from the interest on everyone's savings before it is paid. It's not possible for banks and building societies to tax people at different rates as it would be too complex and time-consuming.
However, the existing system means that some people may end up paying more tax than they need to. The good news is that if you are a non-taxpayer, or if you qualify for the 10 per cent savings rate, you may be due a repayment if interest on your savings has been taxed at 20 per cent.
What's more, if your income is below your taxfree allowance, you can also register your savings accounts to get future interest payments made tax free. And if you think you've overpaid tax in the past, call 0300 200 3300 or visit the website hmrc-gov.uk/taxon/ten-percent.htm to find out the deadlines for claiming tax back for a particular tax year.
There is a time limit for making claims - the earliest tax year you can claim for is 2for is 2010/11. To make a claim for this year, you will need to claim by April 5 2015.
What to do next
1 Visit the website hmrc-gov.uk/taxon/ten-percent.htm, which provides repayment help sheet that asks about your different sources of income and deducts your tax-free allowances. This will help you decide if you’re due a tax repayment. Not online? See phone number at end of panel.
2 If you are due a tax repayment, claiming is easy and can be done using the HMRC Form R40 (PTB) obtainable from the same website mentioned above.
3 To stop tax being taken off your interest in future, complete form R85, which is also obtainable from hmrc-gov.uk/taxon/ten-percent.htm. You will need to complete one form for each bank and building society where you have savings and send it off to them. Don’t send it to HMRC.
For telephone help: For further advice, or to order all the forms mentioned above by phone, (Mon to Fri 8am-8pm & Sat 8am-4pm) call 0300 200 3312