Money: Tax-Free Savings - Exempt? Make sure you've filled in the Revenue's forms

Just because you are a non-taxpayer does not mean you will automatically receive tax-free interest from your savings. While some schemes such as Peps and Tessas are tax free, others are not. So you will need to ensure you do not pay unnecessary tax.

If you have a bank or building society deposit account the interest on your savings will automatically be taxed at 20 per cent. Non-taxpayers need to complete tax-exemption form R85 to receive interest gross. This is available from the branch where you hold your account. You will need to fill in a separate form for each account you hold.

The same rules apply to virtually all bonds from banks and building societies. Typically, interest is automatically taxed at 20 per cent and non-taxpayers will need to fill in the form if they are to receive their interest gross.

Non-taxpayers who have paid tax on their savings in the last six years that they were not liable to pay, can claim this back. Complete form R40, which is available from your tax office. Some banks and building societies also have copies.

Bonds issued by insurance companies and investment houses are taxed differently. The Inland Revenue states that you should always ask the product provider how the bond is taxed before you invest. Investors may find the interest is automatically taxed at 20 per cent and is not reclaimable even if they are non-taxpayers. This is usually the case with guaranteed income and growth bonds. Income from shares is taxed differently. When companies pay out dividends, they automatically pay the tax on this income. Shareholders then receive a cheque, which is a net payment, and a tax credit voucher that represents the tax paid on their behalf.

Non- taxpayers should send the tax credit voucher to the local tax office for a refund of the tax paid on dividends by the company.

Non-taxpayers who have not reclaimed this tax should speak to their tax office on how to reclaim the tax paid on their dividends over the last 6 years.

So how do you know if you are a non-taxpayer? Basically, if your taxable income is less than your personal allowance, then you are probably a non- taxpayer. Taxable income is made up of any earnings, state benefits, pensions, gross dividends and gross interest from savings that you receive, plus any other income. The annual personal allowance for a single person, a married woman and a widow or widower under 65, is pounds 4,045.

Married men receiving the married couple's allowance, single parents and those over 65 have higher personal allowances.

The Inland Revenue has produced A Guide For People With Savings, leaflet IR110, which includes details of how non-taxpayers can receive interest gross, how to reclaim tax already paid, and form R85. Copies are available from tax offices, listed in the directory under Inland Revenue.

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