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

Dazed_and_C0nfused

Universal Credit isn't taxable so doesn't go on an R40.

I presume you realise you declare the statutory interest and tax deducted (and any other taxable income) but not the (non taxable) PPI refund itself.

There is a print and post version of the R40 here,

https://www.gov.uk/government/publications/income-tax-claim-for-repayment-of-tax-deducted-from-savings-and-investments-r40

chocnjb

Hi, I received a rather large payout from a payday loans company last year in October 2021. I am earning under the tax threshold of £12,570 for the tax year ending April 2022 ( will post all figures below) I am in the process of filling in a R40 form to post off to HMRC, can anyone tell me if I am right in my way of thinking I will get most of the 20% amount of tax I was taxed on the 8% interest part of my payment sum.

payout amount- £9548.51
Interest 8%- £2948.58 
taxed 20%-£589.51 

Earnings from my job p60 tax year ending April 2022- £11,388 
no interest earned this year from any other accounts etc.

I am wondering if any of the amounts will push me over the tax threshold (even with my personal allowance amount) 
Can anybody help at all please. Has anybody filled in one of these R40 forms recently, if so how long has it taken to get a response from HMRC? 

Dazed_and_C0nfused

Yes it will push you over the tax threshold.

But given your low earnings you will be able to make use of the savings starter of tax, where upto £5,000 in interest is taxed at 0%.

So, based on your post, your liability will look like this

Pay £11,388
Interest £2,948
Taxable income = £14,336
Less Personal Allowance £12,570*
Income to be taxed = £1,766

Savings starter rate £1,766 x 0% = £0.00

Total tax payable £0.00
Total tax paid £589.51

Tax overpaid = £589.51

You might have to wait a few weeks but worth the wait for nearly £600 😀

* I'm assuming you haven't applied for Marriage Allowance

chocnjb

Amazing, thank you for your help. Will get those forms posted out ASAP 

SteveSam

I wonder if anyone is experiencing huge delays with tax refunds on R40 claim forms for overcharged tax on PPI interest.
I submitted a claim form in September 2021 and have received neither any refund nor any contact.
I have spoken to the HMRC helpline twice and they have confirmed that it is in the system and it has been completed correctly.
Fortunately I have taken a note of the reference number issued as it disappeared from my Gateway account a couple of months ago. Nevertheless I am assured by HMRC staff that it it has not been deleted or lost.
Covid and under-staffing I could understand but this is unbelievably inefficient after all this time.

Dazed_and_C0nfused

You just need to hope it's dealt with before Boris's 90k civil service job cuts cause yet more delays 

If you genuinely have completed the form correctly you have a head start on many other posters who make a right hash of it by including the PPI refunds themselves despite them being non taxable and not having any tax deducted.

jam1eg

Hi

Wonder if someone can assist - I've completed an R40 and been advise there is nothing to come back and just wanted to get this clarified really in normal speak too.

So my claim is back to 2017-18, I earnt £37726.40 which puts me into the higher rate tax band as this was 0-33500 basic 20% & 33500-150000 higher 40%

I earnt nothing else from any other savings bar getting some redress on PPI payments as follows.

				Gross
		Full Refund	Interest	8%	Gross	Tax taken			Amount paid
FDCC		547.71	273.56	587.01	1408.28	117.4			1017.32
FDL		44.74		93.39	138.13	18.68			119.45
FDILPFP		1329.57		1919.01	3248.58	383.81			2864.77
		19.17	2.84	22.3	44.31	4.46			37.01
	Totals	1941.19		2621.71	4839.3	524.35			4038.55

So I guess is this right that I'm owed nothing? - I've put a claim in for the £524.35

thanks in advance

Dazed_and_C0nfused

You have completely misunderstood things.

The basic rate band was £33,500.  But you also have a Personal Allowance.

Why do you think you would get £524 back???

What did you enter in the interest section on the R40??  That seems to be where most people have gone wrong.  

And most importantly when did HMRC receive the R40?

jam1eg

Thanks for your swift reply Dazed.

"The basic rate band was £33,500.  But you also have a Personal Allowance." not sure what you're saying here really, I understand I was in the high tax bracket and yes I do have a personal allowance of £500 right because of the high tax bracket?

I wouldn't be surprised if I got things wrong, I claimed the original PPI back via an overcharging company so thought I would do my best on this bit rather than pay 30% plus VAT on their fees, so I received a letter from said company around claiming this tax back, they had pre-filled in most of the R40 so I completed an online form.

So on the assumption this overcharging company was attempting to make this claim I've used the details read a bit on the internet around this and put 2 and 2 hopefully together - not 2 and 3.

So from memory 2097.36 was the 3.1 Net Interest paid by banks. which was 2621.71 - 524.35 from the above sheet

I sent the original off Mid Feb 2022 which was within the four year grace period.

Dazed_and_C0nfused

If you earned £37,726 then you are nowhere near the higher rate threshold, even with the interest added on top.

The personal allowance is increased by £500 to £11,500 for 2017/18. The basic rate limit is increased by £1,500, so that the higher rate threshold – the point at which individuals become liable to pay tax at the higher rate – is set at £45,000 for 2017/18.

Is taken from this,

https://commonslibrary.parliament.uk/research-briefings/cbp-7915/

Also, there is no allowance for interest.

There is a 0% tax band that will apply to you, the savings nil rate band, where upto £1,000 of interest is taxed at 0%.

Still not sure why you think you could get all of the £524 tax deducted back?