reclaiming tax

ilikefreethings

a friend has recently recieved an annual statement of investment from his savings account from skipton building society. what he has now realised is that he has been taxed at 20% when it should be (he believes because he is earning the minimum wage) at 10%.

how does he claim it back, what forms are required and for how many years can he claim for.

as i am clueless myself i am appealing for others knowledge.
cheers guys

BoGoF

Your friend will only be due a repayment if he has a balance of his 10% rate band available to set against the interest which has been taxed at 20% - any idea how much he earns ?

Assuming a repayment is due he should request forms R40 from his tax office and he can claim back tax to tax year ended 5 April 2003.

ilikefreethings

at £5.52 for a 37.5 hour week = £207.00
and after very quick call has £3343.86 in a regular savers account.
thats all i know.
thanks for the reply BoGoF

BoGoF

Well, the bad news is he won't be entitled to a refund with those earnings, he will have used up all his 10% band and will be paying tax at 22% so hos bank interest has been correctly taxed at 20%

mitchaa

ilikefreethings wrote: »

at £5.52 for a 37.5 hour week = £207.00
and after very quick call has £3343.86 in a regular savers account.
thats all i know.
thanks for the reply BoGoF

As above

£5.52 x 37.5 x 52 = £10764 annual salary.

The standard basic tax code is 522l. This means he gets an allowance of £5225 free from tax.

£10764 minus his allowance of £5225 = £5539 taxable.

Today on the 22% and 10% tax structure, the 10% tax is only applicable on the 1st £2230 of his taxable earnings, the remainder is taxed at 22%.

So...

The 1st £2230 @ 10% = £223
The remainder (£5539-£2230) = £3309 @ 22% = £727.98

Total tax should for the year 2007/2008 should be £950.98

Basically no rebate is due as he earns too much (yes even on minimum wage) to avoid the 22% tax band.

From next month he will be worse off as they are abolishing the 10% bottom tax and replacing it with a standard rate 20%, so he will be paying more tax next year.