If you are a non-taxpayer, make sure you register for interest to be paid gross and if you have not done that, make sure that you claim back any tax paid on interest earned on bank and building society deposits.
To receive interest gross you should complete the HMRC form R85.
If tax has already been deducted this can be reclaimed on form R40. This is available to download via the following link:
www.hmrc.gov.uk/forms/r40.pdf.
Example:
Henry holds £50,000 on deposit and receives interest of £2,000 net of 20% tax.
He has no other income for the year.
He is therefore entitled to reclaim the £500 tax deducted from his interest by utilising his personal allowance against this income.
Also, in future years he should file form R85 to receive the interest gross.
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