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. Because Neil’s total income is less than his allowance of £5225 for the current tax year (2007-2008) he can complete form R85 and receive his interest without tax taken off.
Neil can also claim back the overpaid tax from HM Revenue & Customs.
Neil’s tax calculation for the 2007-2008 year looks like this.
|
Gross |
Tax |
|---|---|---|
Interest |
£20 |
£4 |
Total |
£20 |
£4 |
Less allowance |
£5225 |
|
Taxable income |
£0 |
£4 overpaid |
