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

Dazed_and_confused

As your tax code was not the standard 1150L 2017:18 it's not possible to be 100% certain but on the info supplied you owe about £384 tax on the PPI interest.

And £584 was deducted so there is £200 refund due.

You may well owe a little on your employment income due to how PAYE works and that will be taken into account in the calculation so overall you might get £197-198 back not £200.

It might be different depending on why your tax code was 1143L but I would be very surprised, based on what you have posted, if you weren't due a refund.

Why not complete an R40 form for 2017:18 and send it off to HMRC?

You have done most of the leg work in your previous post.

hazelplt

Thank you so much for your help.

The tax code was different due to a benefit paid to me by my employer, which I didn't get. I only noticed it this year and have got my tax code changed to 1150L.

I already completed the HMRC online form with the above details. I received a response from them to say I had paid the correct amount of tax. Hence my confusion.

Is there a way to challenge it? What information do I need to make a challenge?

Dazed_and_confused

What did you enter on the R40?

Looking at some of the other posts on here and Martin Lewis's original article some have been telling HMRC about things they don't need to.

hazelplt

I put the figures that I put in this post. I don't think I added anything else. I just followed the questions on the form.

I've been back on the website, but can't see how to access the claim I made to see the info.

Dazed_and_confused

As you have actually sent them an R40 I think it might be best of you phoned and tried to discuss it with someone.

The benefit element you mentioned might complicate it a little but even if you accept there was a benefit that year (whatever was in your code probably meant you paid about £14 extra tax) there should still be a c£200 refund due.

I would also suggest you don't mention any savings "allowance". Simply because there isn't one and it can only confuse matters.

hazelplt

So on what grounds should I be entitled to a refund?

Dazed_and_confused

That the tax you have to pay on the interest is £384. And you have already paid £584.

If we assume your PAYE tax was correct then your interest would be taxed like this,

£1,000 x 0% (savings nil rate) = £0.00
£1,923 x 20% (savings basic rate) = £384.60

Total tax due on interest = £384.60

Total tax paid on interest is £584.72

Tax overpaid £200.12

hazelplt

Thank you so much. I feel much better equipped now. :-)

gazzie

Hi Martin


I just received my PPI refund through this morning and I paid £392.23 income tax on the statutory compensation element (20% tax). I am a non tax payer and the instructions included said I should complete an Inland Revenue R40 form to get the tax refunded. However I am self employed and I complete a self assessment return online each year.


Do I use an R40 as they suggested - or wait until I complete my online Self Assessment and claim through that somehow? I haven't done last year's (2018/19) yet as I do my return in December.



As I just received this refund this week and therefore in 2019/20 tax year do I have to wait until I do a Self Assessment for this year (which won't be until December 2020?) or can I get this refunded earlier?



Thanks


Gaz

Dazed_and_confused

No, you cannot use the R40.

You need to include the interest (and tax deducted) on your 2019:20 tax return and it will be taken into account in your 2019:20 tax calculation.

It is your choice to file the return in December each year. You could file your 2019:20 return on 6 April 2020 if you really wanted to.