Savers who have overpaid tax are being encouraged to claim back their share of a pot worth well over £200 million.

It's crucial you actively ask for what is owed as it's unlikely the taxman will come knocking at your door armed with a cheque.

There are two issues currently in the spotlight:

  • Pensioners are at the centre of a Government campaign to help unite them with savings tax they've unnecessarily paid.

  • Higher rate taxpayers could also be due money back on pension contributions.

Tony Tesciuba, from accountancy firm Tesciuba Limited, says: "If you think you have paid too much tax, don’t wait for a refund, it's up to you to claim. It's well worth checking, and you can go back up to 6 years."

Savings tax: the issue

Anyone whose income is less than £6,475 a year, with savings interest included, usually does not have to pay any tax, including savings tax. As pensioners tend to have low incomes, many don't need to pay tax, though their allowance could be up to £9,640 (see the Income Tax Checker).

Unless you inform your savings provider, you'll be taxed at the standard 20% rate and then have to get that cash back from the Government, if eligible.

You only need to pay 10% tax on savings interest if you earn between £6,475 and £8,915 a year (those higher and lower thresholds rise by up to £3,165 for some pensioners), meaning anyone in that category could get half their tax back.

HM Revenue & Customs (HMRC) is writing to around 3.4 million Pension Credit recipients, asking them to check if they have overpaid tax on bank or building society interest.

Savings tax: how to claim

If you think you're due a repayment, make a claim by completing form R40 from HMRC. Call the Revenue on 0845 366 7850 or visit HMRC's website to get one.

To ensure you don't pay tax in future, fill in form R85 by calling the same number or visiting HMRC's website.

Savings tax: how much can you reclaim?

That depends on how much you earned, but HMRC will allow you to get back overpaid tax approximately six years back.

Technically speaking, every 31 January marks the deadline for claiming back tax for the financial year (April-April) that ended just under six years earlier.

So 31 January 2010 marks the last day you can claim for the 2003-04 tax year.

Pension contributions: the issue

It's estimated by insurer Standard Life that 250,000 higher-rate taxpayers saving for a pension in employer-based schemes are failing to claim back their full tax relief.

When you save in a pension you automatically get a 20% rebate on contributions but some higher rate taxpayers, due a 40% rebate, must claim the extra cash themselves. If you save into a final salary scheme, there's usually no tax to claim back.

It's often more efficient to pay contributions via a 'salary sacrifice' scheme where you save by not paying National Insurance on contributions and you don't have to claim back tax as it is not deducted in the first place.

However, these schemes are not for everyone (See the Salary Sacrifice MSE News story).

Pension contributions: how to claim

If you're due money back on pension contributions, you either declare this on your tax return or write to your local tax office to claim (find your local office via the HMRC website). Once you've claimed, you should automatically get the full rebate in future years.

Pension contributions: how much can you reclaim?

That depends on how much you contributed, but HMRC will allow you to claim back tax approximately six years back.

Technically speaking, every 31 January marks the deadline for claiming back tax for the financial year (April-April) that ended just under six years earlier.

So 31 January 2010 marks the last day you can claim for the 2003-04 tax year.

Further reading/Key links

Boost income: Benefits Check-up, State Pension Boosting, Top Savings
Tax help: Income Tax Checker, 2009/10 Tax Rates