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Page last updated at 14:50 GMT, Saturday, 6 December 2008

Reclaim your share of 250m tax

By Paul Lewis
BBC Radio 4's Money Box

stacks of coins
It all adds up: Do you know how much you could reclaim?

The Revenue has taken 250m too much off people's savings and it wants to pay it back.

Most of the people owed the money are on a low income and should not pay tax at all.

But banks and building societies deduct 20% tax automatically from the interest earned on savings.

The Revenue is encouraging low income people with savings to check their statements and claim back any tax they are owed.

'It's yours'

Claire Merrils of HM Revenue & Customs told Money Box on Radio 4,

"We reckon there is now about 250m of tax and up to three million people entitled to a share of this money.

"We know that there are a lot of pensioners who need every penny.

"So if they want their money back please claim it because it's yours."

Two groups of people may be paying too much tax.

The first group are those whose income is below the tax allowance.

Registering to have interest paid gross:
0845 980 0645
Claiming overpaid tax back:
0845 366 7850
They should not be paying tax at all and can register to have it paid gross in future.

The personal tax allowance in 2008/09 is 6,035 for everyone under 65.

Older people can have 9,030 a year before paying tax and those aged 75 or more can have up to 9,180.

To qualify for the higher amount your birthday can be as late as 5 April 2009.

Claire Merrills explained what to do.

"People need to add up all their income together, pensions and so on, including the income from those bank or building society accounts.

"If the total is less than their allowance they need to fill in form R85 so they don't get tax taken off.

"They should also contact us and we can send them a form - an R40 - and you do need one for each tax year but you can claim back to 2002/03."

An extra 10%

The second group cannot have their income paid gross but must claim back overpaid tax.

Their income is above their personal allowance but within 2,320 of it.

Their interest should then be taxed at just 10%.

So they can reclaim the extra 10% which has been over-deducted also using form R40.

Because this is all very complicated the Revenue has two helplines.

Call 0845 980 0645 about registering to have interest paid gross.

And call 0845 366 7850 about claiming overpaid tax back.

BBC Radio 4's Money Box was broadcast on Saturday,
6 December 2008 at 1204 GMT.

Tax refund limit cut by a third
14 Jun 08 |  Moneybox
200,000 pensioners are overtaxed
13 Jan 07 |  Moneybox


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