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If Your Savings Are Being Taxed

(when they shouldn't be)

Here's how to get them paid Gross

Paying unnecessary tax on savings is a common problem especially among pensioners. In fact I once heard a statistic that up to 6 million non-tax payers are wasting an average of £53 a year by paying unnecessary tax on their savings.

The solution to the problem is to fill out the R85 tax form. These are available online (see below) or from your bank/building society.

Who qualifies for no taxable savings
Anyone over 16 who receives an income of less than the tax allowances.

Or to put it another way - if you're not currently paying income tax your savings shouldn't be taxed. Also, people who only pay tax at the 10% rate are eligible for non-taxable savings.

Why the R85 form is important

Banks and Building Societies work on the assumption that as the majority of their clients pay tax it's easier to automatically debit tax from every savings account. They will therefore deduct 20% of the interest and pay this directly to the Government.

So it's therefore your duty to tell your bank if you're a non-taxpayer.

How to proceed
  • Read the Inland Revenue's R85 Help sheet (PDF format)
  • Download the R85 form here (PDF format)
  • Give or send the completed R85 form to your bank or building society (one form covers all of your existing accounts with a single bank or building society)
  • If you have various accounts with different banks or building societies then separate forms are needed
  • Contact your bank in 1-2 months to make sure they've taken the necessary action
See also

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