You may be able to get interest on your savings paid tax-free or get some tax back if you’re on a low income.

When you pay tax on your savings interest

You pay tax on most savings interest, unless it’s from a tax-free savings account like:

  • an Individual Savings Account (ISA)
  • some National Savings and Investments products (like savings certificates or Premium Bonds)
  • Junior ISAs or Child Trust Funds

For most other savings accounts, Income Tax at 20% is usually automatically taken away from your interest before it’s paid to you.

When you can get your interest paid tax-free

You can get your savings interest tax-free if your total income that you pay tax on in the 2013 to 2014 tax year is below specific limits.

Your age Maximum taxable income to get interest paid tax-free
Born after 5 April 1948 £10,000
Born between 6 April 1938 and 5 April 1948 £10,500
Born before 6 April 1938 £10,660

These figures will be higher If you get Blind Person’s Allowance or Married Couple’s Allowance. Check using HM Revenue and Customs’ (HMRC) calculator.

Ask your bank or building society to pay your savings and investment interest tax-free by filling in form R85.

When you can reclaim tax already paid on your interest

You may be able to claim back half the tax paid on savings interest.

Tax year Maximum repayment
2013 to 2014 up to £279
2014 to 2015 up to £288

How much you can claim depends on your age and how much of your income you pay tax on.

Your age Maximum taxable income to reclaim
Born after 5 April 1948 £12,880
Born between 6 April 1938 and 5 April 1948 £13,380
Born before 6 April 1938 £13,540

Your non-savings income is counted before your savings interest when working out how much you can claim back.

Example

Your taxable income is £10,000 and you’re aged 62. You also get interest from savings of £3,000 a year.

But the limit for people born after April 5 1948 is £12,880 - so you can only claim back half the tax paid on £2,880 interest.

How to get a repayment

Fill in ‘Form R40’ and send it to HMRC.

HMRC
Leicester & Northants (Claims)
Saxon House
1 Causeway Lane
Leicester
LE1 4AA

When you must pay additional tax

You must pay extra tax on your savings and investment interest if you pay Income Tax at the higher or additional rate.

If you fill in a Self Assessment tax return each year, you’ll pay the extra tax either:

  • as part of your Self Assessment bill
  • through your employer or pension provider - HMRC will tell them how much to deduct

You must let HMRC know If you’re not paying the extra tax due on the interest.

HMRC Income Tax enquiries
Telephone 0300 200 3300
Textphone 0300 200 3319
Monday to Friday, 8am to 8pm
Saturday, 8am to 4pm
Find out about call charges.

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