Reclaiming tax paid on savings interest

Most people do not pay any tax on their savings interest at all, because it falls within their allowances. But when interest goes above your allowances, tax is charged at your usual rate of Income Tax, and the way it is collected means you can end up paying too much or too little without ever filling in a form¹. The good news is that HMRC does much of the work itself: after the tax year ends, your bank or building society tells HMRC how much interest you earned, and HMRC then either adjusts your tax code, sends you a P800 calculation, or sends a Simple Assessment bill¹.

If you have paid too much, you can get it back. Refunds can be claimed online on GOV.UK, on the HMRC app, or by asking HMRC to send a cheque, and HMRC may instead reduce the tax collected from your future wages². This page explains how tax on savings interest is collected, when HMRC settles it for you, how to reclaim through Self Assessment, the deadlines that matter, and how to spot the refund scams that target people expecting money back.

How tax on savings interest is collected

Interest on savings is paid "gross", which means without tax taken off first. That was not always the case, and the change is why reclaiming works the way it does now. You pay tax on any interest over your allowance at your usual rate of Income Tax, and HMRC collects it after the fact rather than your bank deducting it as you go¹. The allowances themselves, the personal savings allowance and the starting rate for savings, are covered in the guide to how tax on savings interest works.

For most people the process is automatic. After the end of the tax year, your bank or building society tells HMRC how much interest you earned, provided your savings interest was £10,000 or less¹. HMRC then adds an estimated amount to your tax code for the current tax year, based on the information your bank gave it for the previous year¹. If you are employed or get a pension, HMRC will usually collect the tax this way, spread across the year in your pay or pension¹.

If you do not have a tax code, or it cannot be changed, HMRC may send a Simple Assessment letter instead¹. And if your bank or building society tells HMRC that you had more than £10,000 in savings interest, HMRC will send you a notice to file a tax return, which brings you into Self Assessment¹.

There are two important timing points. First, the collection is always a year behind: HMRC tells you about tax due on interest earned in the 2025 to 2026 tax year in a tax calculation sent during the 2026 to 2027 tax year, and the tax is usually collected through your tax code in 2027 to 2028¹. Second, if you have tax to pay on your savings interest and do not get a letter from HMRC by 31 March of the following tax year, you must contact HMRC yourself¹. Waiting for HMRC to notice is not enough once that date has passed.

Scottish taxpayers pay the same tax on savings interest as the rest of the UK, even though the rates on other income differ in Scotland⁷. The details are in the guide to tax on savings interest for Scottish taxpayers.

One group can avoid reclaiming altogether. Legislation enacted in 2014 simplified the starting rate for savings by allowing eligible savers to register with their bank or building society to receive interest without tax deducted, rather than having to reclaim tax from HMRC afterwards⁸. This matters mainly for people whose income is low enough that they are unlikely to owe income tax on their savings at all.

Savings tax rates rise by 2 percentage points from April 2027

Anyone reclaiming or paying tax on savings interest needs to know that the rates are changing. The government announced in the Autumn Budget 2025 that the rates of income tax applicable to savings income will increase by 2 percentage points across all bands from April 2027³. The House of Lords Library summarised the same measure as increasing tax on property income and savings income by two percentage points at the basic, higher and additional rates⁹.

The specific new rates are set out in official documents:

The legislation for the 2026 to 2027 tax year still sets the savings higher rate at 40%¹², which confirms that the increase applies from the following year, 2027 to 2028. HMRC's Tax-free Savings Newsletter confirms the higher rate will be increased to 42% for that tax year¹¹.

What does this mean for someone reclaiming? A refund relates to the tax year the interest was earned in, so a claim for interest earned before April 2027 is calculated at the old rates, not the new ones. But interest earned from 6 April 2027 onwards is taxed at the higher rates, so more savers will cross their allowances and face a bill, and the amounts at stake in both directions, refunds and underpayments, get larger. Dividend tax rates are rising too, by 2 percentage points at the ordinary and upper rates from April 2026³, which affects people with both types of income.

P800 and Simple Assessment letters: when HMRC settles it for you

Most people never claim a savings tax refund in the usual sense, because HMRC does it for them. If you have paid too much or too little tax by the end of the tax year, which ends on 5 April, HMRC will send you either a tax calculation letter, known as a P800, or a Simple Assessment letter¹³. The P800 is sent when HMRC finds a difference between what you paid and what you owed¹⁴.

The Simple Assessment works the other way round: HMRC sends you a Simple Assessment tax bill, also known as a PA302, if you did not pay enough tax and it could not collect the shortfall through your tax code¹⁵. HMRC works this out using information from employers, pension providers, banks and building societies¹⁵. One of the triggers for a Simple Assessment is simply that there is tax to pay on interest on savings or dividends¹⁶, which is why savers who have never completed a tax return can still receive one.

A worked example in the official guidance shows how this operates in practice: a taxpayer with £16,000 of State Pension and £1,500 of private pension income receives a Simple Assessment after the end of the tax year to collect the remaining £236 of tax due¹⁵. The letter tells you what you owe and how to pay, and HMRC has publicly urged customers not to ignore Simple Assessment letters when they arrive¹⁶.

If you pay too much under a Simple Assessment, you need to contact HMRC for a refund¹⁵. If you owe HMRC more than £3,000, a Simple Assessment letter is used rather than collection through your tax code¹³. The key point for a saver is that these letters are the normal mechanism: receiving one does not mean anything has gone wrong, but the figures in it should be checked against your own records before you pay or accept a refund.

Reclaiming through a Self Assessment tax return

Self Assessment is the route for people whose affairs are more complicated, and savings interest can be the thing that tips you into it. If you already send a Self Assessment tax return, you report any interest earned on savings there¹. If your savings interest is more than £10,000, you need to tell HMRC how much interest you earned on a Self Assessment tax return, and if you do not already complete one, you will need to register¹.

HMRC launched an improved Self Assessment registration service, which matters because registering is the first step for anyone newly required to file⁵. The deadline for submitting a tax return and paying any tax owed for the 2025 to 2026 tax year is 31 January 2027⁵.

Within the return, overpaid tax on savings can be recovered. HMRC's own manual confirms that basic rate tax paid on income chargeable at the starting rate for savings, or covered by the personal savings allowance, is repayable, and that claims are possible outside Self Assessment under ITA07/S17¹⁷. That last point matters: if your only issue is tax deducted on savings income that should have been covered by an allowance, you do not necessarily need to enter Self Assessment at all to get it back. The definition of "savings income" for these purposes is in ITA07/S18¹⁷.

A Self Assessment return is also where other reliefs are claimed, which can affect the tax ultimately due on your savings. Reliefs you can claim on the return include tax relief on private pension contributions, marriage allowance, blind person's allowance, and reliefs on investments and qualifying loans¹⁸. Scottish taxpayers can claim relief on private pension contributions either on the Self Assessment return or through their tax code¹⁹.

Deadlines: 31 January online, 31 October on paper

The deadlines are fixed by tax year, not by when you receive a letter. The online tax return and payment deadline for the 2025 to 2026 tax year is 31 January 2027⁵. HMRC's messaging around Self Assessment registration repeats the same date: file the online return and pay any tax due by 31 January 2027²⁰. The tax return deadline itself remains 31 January²¹.

If you send your return by post, the deadline is earlier: 31 October⁶. You will be fined if you miss the deadline⁶. People living abroad face their own rules on UK income, including savings interest, and the guidance on tax on UK income when living abroad sets those out⁶.

For claims made outside Self Assessment, different time limits can apply depending on what is being claimed. Under the FIG regime for foreign income and gains, you have until the anniversary of 31 January following the end of the tax year to which the claim relates, which is 12 months from the normal filing date²². That is a shorter window than many people assume, so a claim that follows a refund of tax on savings interest connected to foreign income needs to be made promptly.

Refund texts and third parties: checking what is genuine

Expecting a refund makes people vulnerable, and scammers know it. HMRC may send you a text message saying you are due a tax refund, also known as a P800 refund, but only if it has already sent a letter and had no response²³. HMRC publishes guidance on checking whether a text message you have received from it is genuine, and that guidance is the place to check before responding to anything²³.

The warning signs are consistent: messages asking you to click a link to "claim your refund", requests for bank details, or urgency. HMRC does not notify people of refunds by text out of the blue, so an unexpected message about a savings tax refund should be checked against the official guidance before anything else²³.

Refund companies, sometimes called claims management companies, offer to reclaim tax for a fee. The tax they reclaim on savings interest is money you could claim yourself for free, online, on the HMRC app, or by cheque². Where a claims management company has taken a cut, the position can be worse still: if you do not earn enough to pay income tax, you can usually claim back the tax the company has deducted for you, but you need to contact HMRC to do this²⁴. The Financial Ombudsman Service can consider complaints about claims management companies and compensation for financial loss²⁴.

Getting someone to deal with HMRC for you

There are circumstances where someone else needs to handle your tax affairs, and HMRC has set processes for each. The clearest example is bereavement. When someone dies, you can call the Bereavement Helpline to tell HMRC, and if you cannot call the helpline, you must fill in form P1000 to tell HMRC who is dealing with the person's money, property and possessions²⁵. Until HMRC knows who is dealing with the estate, it cannot discuss the deceased person's tax, including any refund of tax overpaid on savings interest, with anyone else.

For people who are alive but unable to deal with HMRC themselves, the same principle applies: HMRC needs to know who is authorised to act. A relative or friend cannot simply call up and discuss your savings interest, your tax code or a P800 letter without that authority being in place.

Other situations have their own routes. If you received compensation paid through a claims management company and tax was deducted, you can declare the compensation to HMRC or include it on a self assessment tax return so it is taxed correctly²⁴. Where HMRC is reviewing what a policy change means for customers, as it has done following changes affecting loan scheme members, it says so publicly, and anyone affected can wait for that guidance rather than acting on third party demands²⁶.

The practical rule for anyone acting for someone else: establish with HMRC first who you are and what your authority is, whether by helpline, form P1000 after a death, or a written authority for someone still living. Claims made without that in place will stall.

If you owe tax on savings instead of being due a refund

Reclaiming is one side of the coin; the other is discovering you underpaid. Interest on savings is paid gross, and you might have to pay tax on it if it is above your Personal Savings Allowance²⁷. Some savings products, such as fixed rate savings bonds, pay interest gross, and some are available within a tax free ISA²⁷. The comparison of Cash ISA vs ordinary savings explains how the tax position differs.

If HMRC finds you owe tax that could not be collected through your tax code, you will get a Simple Assessment bill¹⁵. If you owe more than £3,000, that is the route HMRC uses rather than adjusting your code¹³. If you have tax to pay on your savings interest and do not get a letter by 31 March of the following tax year, you must contact HMRC yourself¹, so the obligation to speak up runs both ways.

Two further points protect you in this situation. First, if you receive a repayment that turns out not to have been due, you must pay it back along with any interest due⁸, so a refund is not final until the underlying figures are right. Second, where HMRC repays money that was overpaid, interest can run in your favour: in the student loan context, for example, interest on overpayments is paid at the same rate as it is charged to your account and is tax free²⁸. The same principle of interest running on HMRC repayments appears in other legislation, so an underpayment corrected late is not necessarily cost free in either direction.

Disagreeing with HMRC and where to get help

HMRC's calculations are only as good as the information it holds, and the information from banks and pension providers is not always complete or matched to the right year. The first step when a P800 or Simple Assessment letter looks wrong is to check the figures against your own records: your certificates of interest and savings tax statements, your tax code notice, and your bank statements. If we find a difference between what you paid and what you owed, HMRC sends a P800 tax calculation letter¹⁴, but the letter shows HMRC's figures, not yours, and the two do not always agree.

If something is wrong, contact HMRC²⁹. You can check and claim a refund online on GOV.UK, on the app, or by asking HMRC to send you a cheque, and HMRC may also reduce tax collected from future wages instead². If you paid too much under a Simple Assessment, you need to contact HMRC for a refund¹⁵.

When amending anything already sent to HMRC, completeness matters: if you do not send all the information and documents with your amendment, HMRC may reject it as invalid⁸. That applies to corrections of returns and to claims generally, so gather the evidence before writing.

Free, impartial help is available. HMRC's own guidance on tax codes and refunds is written for the general public², and the Tax Confident campaign explains the common letters people receive from HMRC, including the P800¹⁴. For wider money questions, MoneyHelper offers free guidance, and the guides to how tax on savings interest works and the personal savings allowance on this site cover the allowances behind any calculation. If a dispute cannot be resolved with HMRC directly, the complaint can be escalated within HMRC and then to the Adjudicator or the Parliamentary and Health Service Ombudsman, and complaints about claims management companies go to the Financial Ombudsman Service²⁴.