Banks not helping non-tax payers

Pensioners and low-income account holders, are not being helped to avoid tax by their banks, according to the Low Income Tax Reform Group (LITRG).

Banks should ask their new account holders whether they pay tax, ask them to complete form R85, and then return it back to the bank.

The bank should also provide the help sheet, which is produced by HMRC (Her Majesty’s Revenue and Customs).

Completion of form R85 will prevent tax being removed from interest, at source, by the bank.

LITRG found that only one in five banks surveyed had the up-to-date form in stock and only half of the banks had the advice sheet.

LITRG says: "Very often the tax deducted incorrectly never gets repaid by HMRC."

Non-tax payers should notify the bank, however, after bereavement, or a change in circumstances, because their tax status may have changed.