Martin Lewis: Had a PPI payout? If so, you can reclaim the tax on it

happyandcontented

I can't find the letter that came with the payout but it was £10,600 is there a way of working out the figure for statutory interest?

Dazed_and_C0nfused

Was the £10,600 the total including the PPI refund itself?

If so then no you won't be able to.

happyandcontented

Yes, that was the total. I will need to find the letter then!

hossa25

Hi all,

Sad day here and I am pretty sure it will be my fault for not reading something properly 

My husband filled in an R40 as he was taxed £512.49 on his PPI payout from 2018/9 tax year (£4980 payout after tax)

We have now had a letter to say we in fact owe them  £285 from that tax year as they are classing the full PPI money as “savings income”. 

He pays tax at 20% and his normal income that year was £23420 so they are saying his total income (including the PPI payout being £4970) was £28400. 

Taking off the allowed £11850 leaves total taxable income as £16550 they say. Meaning they tell me he should have paid £3100 tax and only paid £2825. Leaving us owing £285. 


Not sure how I got it so wrong.  Am I missing anything or do I just chalk this down to maybe I shouldn’t be entering  into these things if I can’t get my head around the small print 

I genuinely thought we shouldn’t have been taxed on the PPI looking at the examples before we submitted the R40. 

thanks for reading

D x

Dazed_and_C0nfused

PPI refunds aren't taxable income and don't have tax deducted.

The statutory interest paid alongside the PPI refund is taxable and does have tax deducted.

Have you declared the PPI refund on the R40?

If so you need to send a letter explaining it was completed incorrectly and what the correct figures are.  Might be simplest to send the breakdown from the bank if you have it.

As he was earning £23k he is likely to be due a maximum refund of £200.

So if you get this corrected it will make him £485 better off than he is today (changing from owing £285 to getting a refund for £200)

hossa25

Aww thank you dazed and confused. I did send them through the PPI document so maybe I have done something wrong on then r40 it was pretty confusing. 

The place I put the PPI income seemed to be the only place I could fill it in. There was nowhere else where I could put an amount. 

Wondering if a phone call is easier although I am guessing they may not talk to me (and hubby gets into a panic about all things money)

thank you for replying. That gives me a little hope that we may not owe them!

d x

Dazed_and_C0nfused

Where you have gone wrong is you have told HMRC about some non taxable income.

The R40 is to declare taxable income and PPI refunds aren't taxable and do not have tax deducted from them.

If you have already sent the PPI document then a phone call may be enough to get things corrected.

hossa25

Oh gosh. I’m getting more confused 

Did I not even fill the right form in?

Dazed_and_C0nfused

Did you include the PPI refund?

Did you include the statutory interest and tax deducted from the interest?

hossa25

I think I did - but there seems no way for us to look at what we filled in now. I thought I followed all the guidance and read the Martin Lewis guide as we were doing it a few months ago. But I suppose I need to bite the bullet and just try ringing them. 

Sorry to give such rubbish replies!

D x