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Pension savings in line for tax rebate

09 November 2009 / by Andy Davies

Pensioners who have been charged too much tax from returns on their savings could be in line for a tax windfall, HM Revenue and Customs (HMRC) has announced.

Currently, banks and building societies are required by law to deduct 20 per cent tax from interest on savings before it is paid. However, pensioners and other savers who qualify for the 10 per cent tax rate will be due a repayment if they have been taxed at a rate of 20 per cent.

Launching its new TaxBack campaign, HMRC is now encouraging pensioners who have overpaid in tax to claim back what is theirs.

In addition, HMRC is also urging non-taxpaying pensioners to register for their savings interest to be paid in gross in the future and avoid tax deductions by completing an R85 form and sending it to their bank or building society.

Encouraging savers who have overpaid to make a claim, Sarah McCarthy-Fry, exchequer secretary to the Treasury, said: "We know times are tough for many pensioners, and we don't want anyone paying tax they don't need to.

"If you think you might have been overpaying tax on your savings, check the figures, and make a claim if you're eligible."

She added: "If it doesn't affect you, but you know someone it might – spread the word."

For those who have been charged too much tax, claims can be made by using an HMRC R40 form.

Meanwhile, HMRC will also be sending out 3.4 million letters and guides to Pension Credit recipients to find out if they are eligible to make a claim.

© Fair Investment Company Ltd