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No doubt most of you will believe this section does not apply to you as savings will probably be something of a novelty, but read on as you may be paying unnecessary tax.

Broadly, savings mean interest received on your bank, building society accounts etc. If you receive any interest on deposits in these accounts then it is potentially taxable.

Generally the bank / building society will have deducted tax from your interest before you receive the money in your account. However, if you believe that all your income (including earnings) is covered by your tax allowances then you can apply to receive your interest without tax deducted by completing form R85 and handing it to your bank.

This will then avoid the need to claim the tax back on your interest. Form R85 is also available in the booklet IR111 - Bank and Building Society interest, which we suggest you read. Both documents are available on our resources page »

You should note that as your income and allowances will most likely change each tax year. It is important for you to review this situation year on year.The tax exemption on savings will no longer apply once your income exceeds your tax allowances. You must notify your bank or building society and the tax office of the change in your circumstances in order for the correct tax treatment to apply.



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