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- Savers being forced to survive on reduced incomes due to bungled tax raid
- They are being taxed before the savings interest hits their bank account
- Many will be hundreds of pounds out of pocket for up to 12 months
Thousands of savers are being forced to survive on reduced incomes because of a bungled tax raid by HM Revenue & Customs. Money Mail has received dozens of letters from pensioners who are being charged tax on savings income they are yet to receive. They are being made poorer because the taxman has started deducting money from their monthly pension or salary to cover dues on what it thinks they get each month from savings interest. It does this by changing your tax code. In reality, savers are being taxed before the savings interest hits their bank account. This is because savings interest is usually paid only once a year, rather than monthly.
It means pensioners have less to live on while they wait for their bank to pay out. Many will be hundreds of pounds out of pocket for up to 12 months or until the savings interest cash arrives. In the worst cases, it can take five years before interest from a fixed-rate bond can be withdrawn. Savers such as Ian Clark, 69, are up in arms. The retired managing director of a textile company, who lives in Fife with his wife Margaret, says: 'The tax office does not appear to understand how this is affecting pensioners. 'I've had my tax code changed so tax due on our savings income is taken out of our pension each month, even though we have not yet received the interest....Read more here