Sorry, but it is now too late to claim back £1,269 in tax on your savings – from seven years ago
Ms M. L. writes: My niece was born in 2005. A year later her grandmother opened a Nationwide Building Society savings account for her. A tax exemption form was completed at the time, so interest would be paid without deduction of tax. In 2014, it was noticed that tax had been deducted from interest since 2008, so we submitted a repayment claim to Revenue & Customs. Nationwide recently told us that the Revenue gave notice in 2008 that the tax exemption had been removed, and staff said that the tax office should have informed us then. Tax deducted since 2010 has now been refunded by the Revenue, but we believe it should repay the earlier tax it collected, amounting to £1,269. IF A SAVER’S income is likely to be less than the annual personal allowance, they (or in this case their family) can apply for interest to be paid in full, with no tax deducted. But if the saver’s income then rises above the annual allowance, the tax office will tell the bank or building society to start deducting tax at source.
This is what happened to your niece’s account. I asked tax officials to look at her records, and they found that in 2007 her income for the year was more than the starting point for income tax, which was then £5,035. The Revenue then told Nationwide to collect tax, and it wrote to you at the time.
In later years, your niece’s income fell back below the tax threshold, and the Revenue has refunded tax it collected. But I am afraid it really is too late to claim for 2009, the year in which tax of £1,269 was collected.