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

Badger197

Hi I have had a coupe of ppi back i filled the R40 form backon line had a reply from the HMRC wanting to know my bank account numbers and sort code for each bank that i held what is the case with this any help would be appreciated as would like to get the tax back .went through the claims guys .Gwyn

Dazed_and_confused

Was the PPI related interest the only interest you received in that tax year or did you receive normal interest from banks/building societies?

And what tax year did you complete the R40 for?

Badger197

Hi Dazed I applied on the R40 form for any interest on the PPI i recieved but i .m sure the HMRC thinks its for any interest on my bank account from 2017-2018 Gwyn

Dazed_and_confused

An R40 is like a simple tax return. You have to declare all taxable income for the year in question. You can't just put the PPI interest down and expect a refund.

Did you declare any other interest for that tax year?

Repeat3Times

My mum claimed successfully and was repaid a few weeks ago. As this falls under the 2019-20 tax year, and she'll be earning other interest on savings until April, will it be necessary to wait until then before submitting an R40? Is there any potential disadvantage to waiting?

doc7576

Hi, looking for some advice for my Dad who has just had a decent PPI payout but not sure if he can claim any of the tax back,
He is currently working with an income circa £1000 gross a month and with a state pension. Tax code is 328L due to pension.
PPI -

Gross Total £16,711.01
Gross interest £9,497.09
Tax £1,899.41
No savings
Based on the above, would he be likely to get any tax back? Cheers

Dazed_and_confused

Yes.

You don't day what his State Pension is but using an educated guess of £9,215 and assuming he has no other income then his interest would be taxed,

£1,000 x 0% (savings nil rate) = £0.00
£8,497 x 20% (savings basic rate) = £1699.40

Tax already paid = £1899.41

Tax overpaid = £200.01

In reality he would probably get a pound or two less as he probably owes some on his employment and pension income (usually ignored but will be taken into account in any calculation HMRC do).

Andy67J

Hi Martin,


We made a claim for Mortgage Payment Protection Insurance incorrectly sold to us and were paid out on it and the interest element was in excess of £3k
I am a higher rate tax payer and my wife is a basic rate tax payer.
As such, is she able to complete the R40 in her name only and benefit from the significantly greater allowance and lower tax she enjoys?
Thanks for your help - great website!
Cheers
Andy

Dazed_and_confused

We made a claim

If that is correct and the interest was paid to you jointly then half is your income (and tax) and half your wife's.

An R40 is like a simplified tax return and is for an individual to use, there is no situation where it would be completed in joint names.

Without full details it's impossible to say but if the interest was £3,000 (£1,500 each) it is possible that you would owe £100 and your wife be due a refund of £200-£300 (her refund will depend on how much basic rate tax she was liable to pay, some basic rate tax payers can receive £5,999 interest before any tax is actually payable.

Emptybottleofjd

I’ve just done the online form and it was suspiciously easy. I thought there’d be more questions. My PPI was paid to me in August 2019, so could only give part year tax/earnings, as far as August. Might this be a problem? I’ve had no other income, savings or otherwise. Will I have to wait until end of tax year? Burning question for me.