What is an R85?
An R85 form allows you claim tax relief on interest earned on savings accounts or current account held within the UK. You can only apply for this form once every 12 months. If you are claiming interest on a loan taken out in another EU member state, it doesn’t matter where you live – just make sure the loan is still active.
To qualify for this form, interest payments must exceed £10,000 per annum. For example, if you earn £5,000 each month and pay interest of 5%, you’ll receive £50 worth of tax relief.
The amount of tax relief depends on how much interest you’re paying. If you’re earning less than 10% interest, you won’t receive any tax relief. However, if you’re earning over 10% interest, you could potentially save up to £1,100 in tax.
Why is a R85 form required?
An R form is used by people whose income falls into certain bands. This includes those who work part-time, self-employed people, students, and some pensioners. If your annual earnings fall within one of these categories, you will receive an R form from HM Revenue & Customs (HMRC). You must complete it every tax year.
The document asks questions about your personal situation, including what you do for a living, where you live, and how many hours you work. It also asks about your financial affairs such as bank accounts, investments and pensions. Some of the information you provide will help HMRC calculate your tax bill. However, there are some things that you cannot tell them. For example, you cannot give HMRC the name of your employer or the amount of any benefits you claim.
What is the personal exemption from taxation?
The tax free personal allowance is a benefit that allows people to claim up to £11,500 of income tax relief each year without paying any tax. This amount is calculated based on how much money you earn during the year. You can find out whether you qualify for the tax free allowance by entering your annual salary into our calculator.
To qualify for the tax free Personal Allowance, you must meet certain conditions:
You must work full-time throughout the whole of the tax year.
Your total earnings cannot exceed £50,000 per annum.
You must pay National Insurance contributions throughout the entire tax year.
If you do not meet one of these three requirements, you will still be able to claim the tax free personal allowance, but you will need to make additional deductions to ensure that you don’t owe any tax.
Can I only register an R85 for my own account?
Yes, you can only use an R85 for yourself. You cannot register it for anyone else. If you want to register it for someone else, please ask him/her to do it themselves.
If you are under 18, you must be accompanied by one of your parents or legal guardians.
You can only apply for an R85 once every 12 months.
What data is required to complete a R85?
The South African Revenue Service (SARS) requires taxpayers to fill out an R85 form if their total income exceeds the personal allowance. This includes any income earned from employment, self-employment, rental properties, dividends, interest, capital gains, pensions, trusts and gifts received.
If you are unsure whether your income is above the personal allowance, contact SARS. They can help you determine what tax you must pay.
What if my annual income increases after filing Form R85?
The government has introduced the Annual Income Tax Return (IF17). This means that taxpayers are required to fill out one return every year, even if they don’t earn enough money to pay tax. If you earn less than R1 million ($82,500), you won’t have to file an IF17. But if you earn more than that amount, you must complete an IF17.
If you make less than R2 million ($164,000) per annum, you will still have to file an IF15 – the previous version of the return. However, if you earn R2 million or more, you will have to file an IF16.
According to Finance Minister Tito Mboweni, the forms are intended to help people understand how much tax they owe and what deductions they can claim. “We want to ensure that everyone pays taxes,” he told reporters during his budget speech earlier this month.
Frequently Asked Questions
Do I pay tax on my savings interest because it exceeds the PSA?
Savings interest exceeding the personal savings allowance (PSA) does not generate taxable income unless you are a taxpayer. If you are a non-taxpayer, you do not need to fill out the R85 form to claim your savings interest. Instead, simply put the money into your account and keep track of how much interest you earn each month. Tax is automatically withheld from your savings income.
If you are a taxpayer, you must submit an annual tax return, which includes a statement of your savings interest. This is known as a PAYE return. In addition to declaring your savings interest, you must also report the amount of tax you paid on this interest.
Could you claim tax back on your savings?
The government says that banks and building societies must charge income tax at 20 per cent on interest paid to customers. This includes money saved with a current account or a personal loan. But there is one loophole – if you don’t owe any tax, you can still register your bank and building societies accounts to stop them taking tax off interest payments.
You could even save yourself up to £1,200 a year if you’re in the lowest tax band.
If you are due to pay less than £100 of tax each year, you might be able to claim back part of what HMRC takes off interest paid to you. For example, someone earning £20,000 a year and paying £2,500 in tax each year could claim back £250 worth of interest.
This is because there are different rates of tax depending on how much you earn and whether you are in the highest or lowest tax bands.