r85 or self assessment

merlin777

if my income drops below the threshold for paying tax I understand i can use an R85 to prevent paying tax on my interest. If i'm already doing a self assessment tax return is an R85 necessary?

Your_Hero

Yes it is necessary because the R85 would allow you to receive your interest paid gross. If you don't do this, it will be deducted 20% tax at source, then you have to reclaim if non-taxpayer.

merlin777

doesn't it get taken into account on the tax return?

PlutoinCapricorn

I get tax deducted by my bank. They send me a certificate each year. When I complete my tax return I input the figures. This often means a small rebate as my income is low. I have not sent a form to my bank because I still hope to increase my income.
So yes, it is taken into account but some people may prefer to receive their interest untaxed.

Your_Hero

merlin777 wrote: »

doesn't it get taken into account on the tax return?

It does, but a tax return is done after the tax-year has ended, normally the next October/January depending if post or online. Wouldn't you rather receive the interest paid gross instead of having tax taken off and then getting a rebate? An R85 should only be completed if you are a non-taxpayer and likely to remain so.

merlin777

thanks guys. as i'm hoping my income will go back up i thnk i'll rely on the tax return.
cheers

PlutoinCapricorn

In my case, the amounts involved are small, and low rates have made them much smaller. I can wait for my rebate!