stevesainty

Hi all, I have a question about Hacienda's track record at refunding overpaid tax.

The background to this query is the ever more difficult challenge of finding a decent interest rate for savings.

Now that we are resident in Spain we can no longer open up a NEW bank account in UK, or so it seems. This means that as most banks offer a one year bonus then drop to a ridiculous 0.5 of 1% there is no possibility of taking up their next tranche of savings scheme.

So we turned to Lloyds International offshore accounts that were offering 1.5%.
We rang them up, gave them our details and got a proforma application form. This just needed, in addition to a signature and date, verification of identity and address.

We toddled off to our nearest branch of Lloyds International armed with all our id's. The young lady was very pleasant but told us that she could not verify our documents as she did not know us as we were not customers.

She said that unlike in UK she could not just take our passport etc. and photocopy it then stamp the copy with a verification spiel. However after seeing our very puzzled looks she telephoned her supervisor and then acceded to our request.

In a general chit chat afterwards it transpires that Lloyds Uk, Lloyds Offshore and Lloyds International are 3 very different organisations with only tenuous links.

Getting back to the subject, the very helpful young lady told us about free banking, minimum balance of £1,200 UK sterling, of the Lloyds International sterling current account.

Once opened we could enjoy free transfers of sterling from UK to sterling in Spain but more importantly use their various term deposit schemes. Each of these schemes ranging from 3 months through 200 days and 11 months offered higher interest rates than the Lloyds International offshore deposit account.

The snag being that the interest paid would be subject to 21% tax before being deposited back into our current account upon maturity.

Both my wife and I are entitled to our Spanish tax allowance and the interest that we would receive would likely be less than our threshold even after taking into account OH state pension.

Finally my question is, how good are Hacienda at given refunds for overpaid tax?

Also are there any pitfalls with Spanish savings schemes, and Lloyds in particular, that I should be aware of?

Kindest regards

Steve

Fred James

That is perfectly normal and is no problem at all.

For residents the tax is always deducted at source. At the end of the year the bank give you a statement of tax deducted and when you declare the interest received on your tax declaration you also give the amount of the deduction.

Since your allowances exceed your other income the tax declaration will be negative as they owe you money. You take the tax declaration forms to the bank and should receive the refund within a couple of weeks direct to your bank account.

angiescarr

Fred is right. Year before last I waited at least 2 months maybe 2 for my repayment of overpaid tax. This last year it was just a week or two. I think they've updated the system.

stevesainty

Thank you very much Fred & Angie. Most helpful