Claiming back interest on savings.

SallySunshine

For the last few years we have claimed back tax on our savings interest, easy to do on-line.
However for some reason one of our accounts (a 2yr bond) paid gross interest last year. This bond is finished now so won't affect me in future.

This has thrown me completely, I can't claim tax back obviously as it hasn't been deducted in the first place, what do I do about this on my tax form, do I owe them money?

This is the first time a bond has done this, same amounts invested elsewhere but tax is always taken off at source.

Mikeyorks

SallySunshine wrote: »

This has thrown me completely, I can't claim tax back obviously as it hasn't been deducted in the first place, what do I do about this on my tax form, do I owe them money?
.

Depends. Do you pay tax - but reclaim tax on interest at the 10% rate? In which case you show the gross interest on the form (R40 or SA?) but no tax deducted.

If you don't pay tax at all. and therefore reclaim the full 20% deducted at source from all accounts? Then you should really file an R85 to get gross interest .... and this particular account has done it for you. If filing an R40 just omit it - if an SA Return then include it as gross but with no tax deducted (as it may impact on allowances).

SallySunshine

Hi mike, just read your post but I am non the wiser.

For some stupid reason, NatWest have given us the interest gross.

I'd never asked for the tax not to be paid and as far as I know this seems to be the only account/bond that did it.

All interest to us from all other accounts/bonds is always paid with tax deducted, why on this account is a mystery.

this is a one-off and will certainly never use NatWest again. From the moment we opened the bond, there was a complete mix-up and it still seems as if it giving us hassle.

I'm hoping when we fill in our tax on-line there will be somewhere where we can tell them that we have gross interest on that one account and they can then work it out.

jennifernil

There is a place to fill in interest receivedvwithout tax deducted, so no problem.

As Mike said, if you normally reclaim some tax, then either you will now have less to reclaim, or if this interest takes you too far into tax youwill have some to pay.

If you normally reclaim ALL your tax on interest, then you should fill in R85s to get interest paid gross on everything.

You say "we" and "us", so if you have joint accounts, you both need to fill up R85s if you both qualify for gross interest.

SallySunshine

Thanks jennifer, that's sorted that out then.

After this summer I will be in receiving a works pension so that'll probably knock getting any tax back on my savings on the head.

All our savings are in joint names so my O.H. will just be claiming his portion back.

Never quite understood the 10% band on savings interest, is everyone entitled to it, or is there a limit?

Mikeyorks

SallySunshine wrote: »

Never quite understood the 10% band on savings interest, is everyone entitled to it, or is there a limit?

I assume - from that - you normally reclaim all your tax back as your total income + gross interest is less than your personal allowance? In which case the fixed term deposit that paid gross can just be ignored if you reclaim via R40. But you declare it if - unusually - you are not a taxpayer but complete an SA Return? There's a part on there to list interest received gross.

The 10% Savings rate only applies where your interest takes you over the personal allowance but no more than £2440 over. That part of the interest that hits the band formed by £personal allowance + £2440 is only chargeable at 10%. May apply (£2560 instead of £2440 next year) once you get the works pension?

jennifernil

SallySunshine wrote: »

Thanks jennifer, that's sorted that out then.

After this summer I will be in receiving a works pension so that'll probably knock getting any tax back on my savings on the head.

All our savings are in joint names so my O.H. will just be claiming his portion back.

Never quite understood the 10% band on savings interest, is everyone entitled to it, or is there a limit?

If one of you is not using their personal allowance, then you should put more of your savings in that persons name so they can get them tax free.

jennifernil

Mikeyorks wrote: »

I assume - from that - you normally reclaim all your tax back as your total income + gross interest is less than your personal allowance? In which case the fixed term deposit that paid gross can just be ignored if you reclaim via R40. But you declare it if - unusually - you are not a taxpayer but complete an SA Return? There's a part on there to list interest received gross.

The R40 does ask about interest received without tax deducted. And about employment/pensions.

After all, you surely need to show your total income was below the threshold, or that your savings interest fell into the 10% band to claim a refund?

SallySunshine

found this quite useful.


http://www.litrg.org.uk/pensioners/tax-essentials/which-tax-rates-apply-to-me.htm

John_Pierpoint

SallySunshine wrote: »

For some stupid reason, NatWest have given us the interest gross.

I'd never asked for the tax not to be paid and as far as I know this seems to be the only account/bond that did it.

All interest to us from all other accounts/bonds is always paid with tax deducted, why on this account is a mystery.

this is a one-off and will certainly never use NatWest again. From the moment we opened the bond, there was a complete mix-up and it still seems as if it giving us hassle.

Did the two (?!?) of you have over 50K in this account by any chance?
What happened to the interest? Did they suggest paying it into another account so you could spend it?
How long did the bond last?
Were you able to get the capital out again during the year in an emergency?