Your tax questions answered
Why does my tax return ask for details of my bank interest as I pay tax on the interest already?
Interest paid on bank accounts is taxed at 20% before it is credited to your account.
You are required to declare your total income on your tax return and will be given credit for any tax already paid at source.
If you pay tax at the higher rates, you will be liable to pay additional tax on the gross interest received.
My income is really low, and I do not pay tax. It seems unfair that I have to pay tax on my bank interest just to claim it back at the end of the year.
You can register for the tax to be paid in full without the deduction of income tax. Just ask your bank or building society for form R85.
I pay tax at a higher rate. What extra tax do I have to pay on my share dividends?
If you pay tax at the higher rate (40%) or the additional rate (50%), you will be liable to tax at 32.5% or 42.5% respectively, on the gross dividend. However, each dividend carries a 10% notional tax credit which will be offset against the additional liability.
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