Banks and building societies usually deduct 20 per cent tax from the interest they pay on most types of savings. However if you're on a low income and have savings, you can register to have the savings interest paid tax free and also claim back any tax that you have already paid.

To register to get interest on your savings tax-free you need to fill in form R85 (PDF 721K) and send it to your bank or building society. This applies if your total taxable income is less than your tax-free Personal Allowance. 

If your taxable income is only slightly higher than your tax-free allowance(s), then some or all of your savings interest may be taxable at 10 per cent - the 'starting rate for savings'. If this applies, you'll probably be able to claim the difference between the tax that was deducted and the amount that's actually due. 
To do this you'll need to fill in a form  R40 (PDF, 102KB) Tax Repayment Form. This form has to be done for each year you think you paid too much tax.

Your income and tax allowances can change from year to year - and during the year. So you may notice that your income goes up and your tax allowances no longer cover it. If this happens it's important you tell your bank or building society straight away so they can start taking tax off your interest. This way, you can avoid ending up with a tax bill at the end of the year.


Real Time Information (RTI) is a new system of PAYE reporting which started for most employers last year (April 2013)

Under RTI, employers with PAYE schemes have to send details to HMRC every time they pay an employee, at the time they pay them, and notify HMRC when no such payments are made in a tax month. The information must be sent to HMRC online, and you use a Full Payment Submission (FPS) to do this.

The payroll software you use will generate the RTI reports you need and submit payroll information online. These include details of:

• the amount you paid your employee(s)
  
• deductions, such as Income Tax and National Insurance contributions (NICs)
  
• starter and leaver dates if applicable
  

RTI has been the biggest change to PAYE processes since 1944. With its introduction, end-of-year forms P35 and P14 have been made redundant and the starter and leaver process is simplified by using FPS to communicate to HMRC. 

The tax coding, P60s, expenses and benefits reporting (through P9/P11) and the payment deadlines to HMRC still remain as before