Savers due tax refund - February 4th 2025

Taxpayers need to carefully check simplified assessments they receive from HMRC because their personal allowance may not have been allocated on the most favourable basis.

The personal savings allowance is not an allowance as such, but instead a nil rate tax band, so automation doesn’t always allocate it correctly. It’s £1,000 for basic rate taxpayers and £500 for those paying at the higher rate; additional rate taxpayers are not entitled to the allowance.

If the personal allowance is allocated against savings income otherwise covered by the personal savings allowance, then the nil-rate element is wasted. But this is what can sometimes happen with simplified assessments. The amounts involved are fairly small, but it shows the importance of checking what HMRC claims is due.

Although HMRC says a taxpayer only has 60 days to deal with an incorrect simplified assessment, there is in fact no time limit where an overpayment is due to HMRC error.