A group of tax experts is today urging people to check their P60 to see if they can reclaim some of their savings.
The Low Incomes Tax Reform Group (LITRG), which is an initiative of the Chartered Institute of Taxation (CIOT), is reminding people that their bank will have automatically deducted 20 per cent for tax from their savings income, regardless of whether or not they were earning enough to be charged this, unless the bank had been informed that they were not a taxpayer.
"Even a small amount of tax deducted can be significant to people on low incomes," said Anthony Thomas, chairman of LITRG. "It is always a good idea to get your tax information together and, if necessary, claim back tax you should not have had deducted."
However, thanks partly to the introduction of the Personal Savings Allowance this April, banks are no longer required to deduct tax directly from interest, meaning those with a low income should no longer have to worry about claiming back overpaid tax on their savings each year.
The new savings income rules from 6 April have their own set of complexities for some, but are good news for many people on low incomes as they no longer have to reclaim tax on savings in future. The problem with change is that it can be confusing, and there is a risk that people will now forget to reclaim tax for earlier years thinking they no longer need to do anything, which is a worry.
Since April, basic rate tax payers have been able to earn up to £1,000 in interest before being taxed, while higher rate taxpayers have been able to earn up to £500.