Tax is paid on all taxable income, including employment income, self-employment profits, interest earned on savings, taxable benefits and investments. Usually you can reclaim any overpayment of tax back from HMRC. This includes tax paid on the interest earned from your savings.
Are savings and investments taxable?
The interest that you earn from savings and investments is taxable. Usually your bank or building society will automatically apply the Personal Savings Allowance to any interest you earn.
Your total income for a year might also be less than your personal tax allowances though. This is the amount that you are entitled to earn before you start paying tax on it. If your earnings are below the threshold, you might be entitled to reclaim back tax that you pay on savings.
How can I reclaim tax paid on savings?
If tax has been charged on your savings or investment income and you aren’t a taxpayer, you can claim this back with an R40 form, or online. You will need to submit a claim for each separate year that you paid too much tax. A claim can be submitted up to four years following the relevant tax year – this is the year that you overpaid tax in.
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