Should I be a non-tax payer on my savings? Help please!

Penfold2

Hi, I wonder if any of you knowledgeable people could spare me a moment...

I'm currently unwell and living on a non-means tested benefit and still have a few pounds left in the bank. My bank is taking tax off my meager savings interest and I have no idea if I should tell them not to. I believe there is an annual tax free allowance, which I am certainly under in terms of benefits, and don't get much in interest. Do the two combined have to be less than the allowance or are they separate? And can I get back any tax I shouldn't have paid? Where from?

Thank you to anybody who may have an answer.

evenasus

If you are under 65, then you are allowed to earn (year 2009-2010) £6,475.00 including any savings interest, before you would be eligible to pay tax.

To reclaim over paid tax from previous years, you will need to submit an R40 form to your tax office.

KingL

Generally, you will ask for the HM Revenue and Customs to repay the tax you have overpaid, rather than telling your bank not to deduct it (this may be different if you are long-term incapacitated). So a retrospective R40 is probably your way to go.

As to whether (and to what extent) your benefit contributes towards your allowance - well that depends on your individual circumstances. For example, the first 28 weeks of Incapacity Benefits are tax free (you ignore them completely when looking at your income/allowance). After then they count towards your annual allowance.

The situation with ESA is different again.

Which one applies to you is dependent on when your claim started...



Here's a few links to get you started. But your jobcentre or HMRC will be able to tell you the facts as they apply to you.

http://www.newcastle.gov.uk/core.nsf/a/wr_benefitratescapitalnonmtb#taxrules
http://www.direct.gov.uk/en/DisabledPeople/FinancialSupport/IncapacityBenefit/DG_10016082
http://www.direct.gov.uk/en/DisabledPeople/FinancialSupport/esa/DG_171896