Claiming back tax overpaid on savings
The R40 form ‘Claim for repayment of tax deducted from savings and investments’ is available on HMRC’s website. Banks and building societies usually deduct 20% tax on savings interest. Individuals who have paid too much tax on interest can use the R40 form to claim back any overpaid tax. Claims can be backdated for up to four years after the end of the tax year. This means that claims can be made now for overpaid interest dating back as far as the 2010-11 tax year which ended on 5 April 2011. The deadline for making claims for the 2010-11 tax year is 5 April 2015.
The R40 form can also be used by taxpayers whose savings’ income should have been taxed at the 10% rate. Non-taxpayers who are eligible to receive interest gross of tax must complete form R85 and send it to their bank or building society in order to receive future interest free of tax.
The Association of Taxation Technicians (ATT) recently issued a reminder to its members that the issue of tax refunds arising from the completion of an R40 claim form is still not an automated process. The R40 form provides a claimant with a choice to have their refund paid directly to a nominee, bank or building society. If this choice is not made, the refund will be sent directly to the claimant. As currently all repayments are made by cheque, the ATT recommends that the cheque is sent directly to the claimant.