Bank and building society interest - example 1

Neil is 17 and still at school. He has no income except the interest he receives from his savings account - £20 a year. But tax of £4 has been taken off the interest, so Neil only receives £16. The bank pays the tax of £4 to HM Revenue & Customs (HMRC). Because Neil’s total income is less than his allowance of £7,475 for the current tax year (2011-12) he can complete form R85 and receive his interest without tax taken off. Neil can also claim back the overpaid tax from HMRC.