Reclaiming Tax on Compensation

CelticStar

Just wondered if anyone could advise me on this. A friend of mine recently received financial compensation from a bank with regard to a complaint. The bank had deducted tax from the settlement and the letter says she can reclaim this from HMRC. She currently submits a self-assessment return as she used to own a business a couple of years ago but as she now rceives less money than her personal allowance she doesn't pay income tax. Is there anywhere in her self-assessment where she can reclaim this money or does she need to write to HMRC to reclaim it instead. Thanks for any help given - sometimes it's just easier to ask here rather than ring HMRC!

Pennywise

Tell us what element of the compensation had tax deducted from it and we'll tell you where it goes on the SA return. Compensation is usually made up of different items. Like all things related to tax, it's the detail that matters.

CelticStar

Pennywise wrote: »

Tell us what element of the compensation had tax deducted from it and we'll tell you where it goes on the SA return. Compensation is usually made up of different items. Like all things related to tax, it's the detail that matters.

Thank you for your reply. She was refunded mis-sold monthly account fees so was refunded those & interest on the fees. It is the interest that has had the income tax deduction.

antrobus

CelticStar wrote: »

... Is there anywhere in her self-assessment where she can reclaim this money ....

Then the answer would be, yes.

The SA return has a box for 'Taxed UK interest'. Once the SA return has been submitted, HMRC will work out that she is due a tax refund, and send her the money.

CelticStar

antrobus wrote: »

Then the answer would be, yes.

The SA return has a box for 'Taxed UK interest'. Once the SA return has been submitted, HMRC will work out that she is due a tax refund, and send her the money.

That is hugely helpful. Thank you very much.

Cook_County

She could come out of self-assessment and submit an R40 instead.