How do I claim back tax on savings income?
In this section we explain how to claim a refund of tax paid on savings income. This section is for people who are not within Self Assessment, that is, people who do not have to fill in a tax return.
Note that this page is mainly of interest for tax years up to and including 2015/16.
6 April 2016 onwards
From 6 April 2016 onwards, UK banks and building societies must pay your interest gross. This means that they do not deduct any income tax from it before you get it. Unless the bank or building society account is a source of tax-free income, for example it is an ISA, the interest is still taxable income and you might have to pay tax on it.
You will need to tell HM Revenue & Customs (HMRC) about your interest income if you are a basic rate taxpayer and you receive more than £1,000 gross taxable interest income in the tax year.
If you are a higher rate taxpayer, you will need to tell HMRC if you get more than £500 gross taxable interest income in the tax year.
The £1,000 and £500 figures shown above mean the interest on all of your accounts – so you have to add up the total interest you receive to work out whether it is within your allowance.
Certain other types of savings income continue to have tax deducted at source, for example, interest paid on compensation, such as in the case of mis-selling of PPI as this is likely to be a large one-off amount and may exceed the personal savings allowance.
If such a tax at source deduction turns out to be excessive, you may be able to claim the tax back by following the guidance in this section.
Up to 6 April 2016
If you received income from savings, for example, bank or building society interest, you would normally have received it net of tax. This means that the bank or building society, or other savings provider, took tax off before you got it. This deduction of income tax was normally at the basic rate of 20%.
If you were on a low income, you may be able to get back some or all of the tax you have paid on your interest for the 2015/16 tax year (see below).
In tax years up to and including the 2015/16 tax year, tax was automatically taken off the interest on UK savings at the rate of 20%. You may need to claim a repayment of tax if any of your savings income should only have been subject to the starting rate of tax for savings (0% rate of tax in 2015/16) or should not have been taxed at all. Due to the time limits of claiming tax back you will only be able to reclaim overpaid tax for the 2015/16 tax year onwards.
If you have already filled in a form R40 in earlier years, you should receive one automatically each tax year.
If you have not filled in a form R40 before then you can complete the form online, get the form online or request a copy by telephoning HMRC. The form comes with guidance notes to help you. If you fill in a paper copy when it is complete, send it to the address shown on GOV.UK.
There is an annotated example of how to compete a form R40 on our main LITRG website.
- a copy of the completed form R40 before you send it to HMRC
- proof of postage from the Post Office recording the date you sent it to HMRC, in case of later query
- the paperwork to support the claim for repayment for at least two years from the end of the tax year for which the claim is made
- interest certificates and bank statements for each of your bank and building society accounts
- dividend vouchers, as you will need to include any dividends and their associated 10% tax credits on the form R40 (for years up to 5 April 2016), even though the 10% tax credit on dividends cannot be repaid.
Put your National Insurance number on the R40 form and in any accompanying letter. Remember to make sure HMRC have an up to date address for you.
You do not need to send interest certificates and bank statements with your claim, but HMRC might ask to see them before they process the form. If so, you will probably be asked for the originals. If so, take copies for your own records first.
Your bank or building society may not give you an interest certificate automatically, but you can ask them to send you one. The bank or building society have to send you a certificate free of charge if you ask for one and they have not sent one out before.
If you have lost an interest certificate and ask the bank or building society for a duplicate, they may charge you, so it is usually best to find out first how much a duplicate interest certificate will cost.
The time limits for claiming back overpaid tax are set out in the introduction page of this section.
You need not wait until the end of the tax year to make a claim. If you claim before the tax year end and cannot provide the exact figures, you may have to make a provisional claim and a final claim.
HMRC do not give specific guidance as to how long a repayment claim will take to process. HMRC sometimes want to check some things before sending your repayment, as part of their aims to prevent unscrupulous people claiming tax back fraudulently.
Between April and September following the end of the tax year there may be delays as this is the most popular time for sending in the forms.
You may also have to wait longer if HMRC decide they need to see supporting information, such as interest certificates.
If you are worried that your repayment is taking a long time to appear, you should telephone HMRC and have your National Insurance number to hand.
You can find more information on form R40 and how to tell whether you are eligible for a repayment of tax on GOV.UK.
There is a guide on how to complete form R40 in the Useful tools section of our main LITRG website.