If you are receiving interest on money you hold with a bank or building society, this interest on this money will be receiving taxation at the usual rate of 20%. If you believe that you should not be paying tax on your interest, then you can inform HM Revenue and Customs (HMRC) using a R85 form.
There are numerous incomes that must receive taxation whilst some others do not need to be taxed. For example, your wages, job seekers allowance, bank interests, and state pension will be taxed, but other incomes such as student loans and income tax credits do not receive taxation.
As bank interest is taxable, any interest you receive is taxable in the year you are paid. In a circumstance where interest is paid to you within one fiscal year but accumulated from a previous one, you will have to calculate it as taxable income in the year of receiving it. This is when the R85 form become important as it can be useful to amend tax on this type of income when applicable. After submitting a R85 form to your bank or HMRC, you will not have to repeat the form until your situation changes. For each bank you will need to fill out separate R85 forms.
The R85 form in a Nutshell
- Used to amend interest paid on bank and building society interest
- One is required for each bank or building society that you have accounts with
- Can be submitted to the bank directly or to HMRC
- Applies to interest received in that tax year even if accumulated from a previous one
If you need help with your tax compliance and refunds please contact The Accountancy Solutions on 01216297768 or 02070784001 for further advice.