Just as children earn their interest tax-free it is also possible that you can qualify for the interest from your current and savings accounts to be paid tax-free also. If you do not earn or are on a low income and do not pay tax then you should get your interest tax-free. All banks and building societies will take tax off your interest at 20% but if you do not earn more than your yearly tax allowance, currently £5,225 per year, then you should get the interest paid gross.
To register to get your interest paid without tax taken off you need to fill in an R85 form and give it to your bank or building society. You need to do this for each bank where you hold an account. You can also register for gross interest on joint accounts to get your share of the interest tax-free.
You are also able to backdate the claim to up to 5 years ago, so if you have been paying tax on your interest for the last 5 years and haven’t been earning above your personal allowance in that time then you can claim that tax back. To make a claim for tax back you need to fill in an R40 Repayment Claim Form.
For more information and help with getting tax-free interest and to download all the relevant forms please visit the Government's Tax Information Page