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

Dazed_and_C0nfused

Ask RBS for the information.

You need to know the statutory interest and tax deducted.  Deduct one from the other to get the net amount.

RFB_2

Beware the scammers are now trying to exploit this.

I got a call claiming to be the HMRC and saying that I was owed a tax refund for a PPI claim and all they needed was my bank details.

They already had my name and address details. I have never had PPI so gave them no info.

capers123

If the tax deducted for claim payments received in 2018/19 came to more than £1000, can it be claimed against future years allowances?

Dazed_and_C0nfused

capers123 said:

If the tax deducted for claim payments received in 2018/19 came to more than £1000, can it be claimed against future years allowances?

The interest is taxable in the year it was paid.

There is no allowance specifically for interest but if you have used your Personal Allowance some of it can be taxed at 0%.

Upto £5,000 using the savings starter rate band (not applicable to everyone)

Upto £1,000 using the savings nil rate band (available once the Personal Allowance and, where applicable, the savings starter rate has been used up).

Chutzpah

After nagging my wife for some time to find the paperwork she's finally dug out the letter from Barclays from her PPI claim in 2018.

I believe I'm ready to submit the R40 and I just want to ensure I've got it all correct. She had no other savings interest that tax year.

Letter stated:

• Statutory compensation interest - £1334.55
• Deduction from statutory compensation interest for income tax at 20% - £266.91

She got her pay details for that tax year from her P60, £17k earnings and just under £1.3k tax paid, so have entered them in the UK employment income section.

In the UK interest section I completed:

Net interest paid by banks, building societies etc, purchased life annuities and PPI payments - £1067.64
Used the "Statutory compensation interest" minus "Deduction from statutory compensation interest for income tax at 20%" figures on letter to arrive at the fgure

Tax taken off the gross interest paid by banks, building societies and purchased life annuities - £266.91
Used the "Deduction from statutory compensation interest for income tax at 20%" figure on letter

Gross interest paid by banks, building societies and purchased life annuities - £1334.55
Used the "Statutory compensation interest" figure on letter

I believe I've done it correctly but the net figure being above the gross figure has thrown me some what. I believe minus any random pounds they decide she underpaid by it should be around £200 due?

Many thanks!

Dazed_and_C0nfused

Based on what you have posted then the interest will be taxed like this,

£1,000 x 0% (savings nil rate) = £0.00
£334 x 20% (savings basic rate) = £66.80

Total tax due £66.80
Tax already paid £266.91
Tax overpaid £200.11

She probably owes HMRC a pound or two on her PAYE income so the actual tax refund might be say £198. 

But she will get a little bit of interest added by HMRC as the refund is being paid so long after the tax year involved.

You haven't said which tax year this relates to but if it is 2017:18 you don't have long to get the claim to HMRC or it will be out of date to make a claim.

Chutzpah

Thanks @Dazed_and_C0nfused, that matches with my expectations, so just submitted. 

It was for the 18/19 tax year, so I knew I had a bit more time but as I said, it took me a while to convince her to dig out the letter I knew she had, somewhere!

Richard66

Hi, I received a ppi reclaim payment from Clydesdale Bank I made just before the deadline and they confirmed a payment successful to me on February 2020 as they took months to investigate. When do I have until to make a claim with HMRC for the 20% that they have paid? Thanks in advance, Rich

Dazed_and_C0nfused

If the payment was made in February 2020 (2019:20 tax year) then you have until 5 April 2024 to make a claim.

The process for doing so differs depending on whether you needed to complete a Self Assessment return or not for 2019:20.

Richard66

Dazed_and_C0nfused said:

If the payment was made in February 2020 (2019:20 tax year) then you have until 5 April 2024 to make a claim.

The process for doing so differs depending on whether you needed to complete a Self Assessment return or not for 2019:20.

Thanks, I was panicking I had to do before today. I was on universal credit for that full year and can't find a p60 in case I need to put in information about benefit payments I got. I don't throw stuff like that so I'm thinking maybe you don't get one when in the benefit system. I tried to get a look on line at an r40 form and it was taking me through setting up an account / creating numerous passwords so I halted as I got the feeling there was more phishing for private information than was needed. Will just get call them to send a form if they won't let you get one online without all the faff.

Thanks for replying 👍