Reclaiming Tax after PPI payout

andrew22

I've had a successful claim of PPI and after repayment the letter that was enclosed said I could possibly reclaim the tax deduction part of it by filling in R40 but i'm totally confused as to whether I can and what the criteria is to do it. I'm a basic rate tax payer.

Nasqueron

You are taxed on the interest element of the refund, if you are basic rate you are allowed £1000 a year interest tax free earnings from all sources so you could claim back any tax paid on that first £1000 of your PPI refund interest if it's covered by the PSA i.e. minus anything from savings etc

Dazed_and_confused

If you are still a basic rate payer after the PPI interest is included then you are likely to have paid too much tax tax on the PPI interest.

It depends on how much normal (non ISA/tax exempt) savings you received in the same tax year (2018:19 presumably).

All of the interest is going to be taxed but some of it is likely to be taxed at 0% meaning you may well have paid too much overall.

As a basic rate payer it could be upto £5,999 taxed at 0%. Or as little as £1,000.

An R40 only applies if you don't file a Self Assessment return. It is basically a simple tax return where you declare all taxable income (including wages, savings interest (but not from an ISA/tax exempt accounts).

If you can supply a bit of actual detail it should be possible to get an idea of what refund might be due.