The Low Incomes Tax Reform Group Urges Taxpayers to Reclaim Tax on Interest

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The Low Incomes Tax Reform Group (LITRG) is urging people to claim back tax deducted from savings income in recent years now that they have received their P60s.

Up until 6 April 2016, financial institutions had to deduct 20% basic rate tax from interest paid to individuals’ bank accounts. The only exception was if you were a non-taxpayer and had registered to have interest paid gross.

Under the new savings regime introduced from 6 April 2016, financial institutions are no longer required to deduct basic rate tax from most interest payments. However, basic rate taxpayers can now have tax-free savings income of £1,000, while if their total taxable income is £17,000 or less, they will not pay any tax on their savings income.

Jane Parry, Managing Partner & Head of Tax, commented: “Anyone who has had a low income and been able to reclaim tax on their interest income should make sure that they do so for the 2015/16 tax year and any earlier years not yet claimed. The rules have now changed, but it’s important not to forget that you can still claim for the period up to 6 April 2016.”

For more information, please contact our tax team at tax@pmm.co.uk or call 01254 679131.