Thousands of pensioners who have overpaid tax on their savings and investments are entitled to reclaim overpayments, and have their interest paid gross in the future, according to an announcement this week by the Revenue (HMRC).Â
Non-taxpayers, including the vast majority of pensioners receiving Pension Credit, are currently taxed on interest in their bank or building society accounts at the full rate of 20%. This is an automatic deduction which the bank or building society is required to make by law.
Lower income pensioners are entitled to reclaim that tax, but many fail to do so.Â
Now, those non-taxpayers can claim back any tax that has already been deducted.Â
They can also register their accounts so that the interest is paid to them tax-free in future, so that there will be no future need to reclaim.Â
HMRC is now planning to send letters to 3.4m recipients of Pension Credit to raise awareness that they may be entitled to reclaim overpaid tax.Â
To register for a savings account to pay interest tax-free in future, accountholders must complete the HMRC Form R85 and send it to their bank.Â
The HMRC tax reclaim helpline can be reached on 0845 3667850.
