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Excess income

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26 February 2008
Issue: 4147 / Categories: Forum & Feedback
The effects of tax liability when no liability has been certified for bank interest paid gross

I deal with the tax affairs of an elderly couple who could best be described as 'legacy' clients. They paid my firm's fees for many years for preparation of accounts and tax returns. Since retirement their affairs are much simpler.

The husband's income basically consists of state and occupational pension and the correct amount of tax is deducted at source. He is not liable to tax at the higher rate.

His wife has a state pension (let's say £2 500 per year) and the rest of her income consists of bank and building society interest.

Her total income has been just below her personal age allowance.

Most of the interest arises from one account and the interest from this is paid gross as she confirmed with the bank that she did not pay tax. In the process of completing her R40 repayment claim form for the year ended...

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