Windfall For Silver Savers?

Pensioners who've overpaid tax on their interest from savings could be eligible for a tax windfall, HM Revenue & Customs (HMRC) announced yesterday.

The possibility of some extra money for pensioners comes as HMRC launched its TaxBack campaign, which aims to encourage pensioners who have overpaid tax on interest from savings to claim it back, and register for savings interest to be paid gross in future, if they're non-taxpayers.

Banks and building societies are required by law to deduct 20 % tax from the interest on everyone's savings before it is paid. But pensioners - and other savers - who are non-taxpayers, or who qualify for the 10 % savings rate, will be due a repayment if their savings have been taxed at 20 %. Claiming is easy, and can be done using HMRC Form R40.

In addition to claiming any overpaid tax back, non-taxpayers can also get future savings interest paid gross, without deduction of tax, by filling out a simple form (Form R85) and sending it to their bank or building society.

Sarah McCarthy-Fry, Exchequer Secretary to the Treasury, said:

"We know times are tough for many pensioners, and we don't want anyone paying tax they don't need to.

"If you think you might have been overpaying tax on your savings, check the figures, and make a claim if you're eligible.

"If it doesn't affect you, but you know someone it might - spread the word".

As part of the campaign, HMRC will be writing to around 3.4 million Pension Credit recipients, asking them to check if they have overpaid tax on their bank or building society interest.

The letter will be accompanied by a helpsheet, which pensioners can use to help them calculate their annual income and allowances and whether they may be due some money back.

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