Form R85 may be completed by a non-taxpayer to have their bank interest paid gross rather than having basic rate tax deducted at source.

However, even where such a form has been completed and submitted, the bank may still pay the interest net by mistake.  Alternatively, you may have forgotten to complete a form in the first instance.  In either case, you may obtain an ‘in year’ tax refund by completing form R40, although you will need to estimate your total income for the year when completing this form.  HMRC state that they may ask for confirmation of the figures after the year end, but this should not delay any repayment due.

For example, if your bank or building society has already taken tax off your interest in 2009/10, which runs from 6 April 2009 to 5 April 2010, you may complete form R40 now if you are not expecting to be a taxpayer in this current year and claim your refund before the year ends on 5 April 2010.

Posted on 12 Nov 2009