Claiming tax back on PPI

gingergirl21

Hi there

It’s time to claim tax back on PPI. my husband has just been made redundant so would really help.

We were pretty fortunate last year and the tax on the interest payments were about £3000.

I didn’t pay any tax last year so I should get £1000 back.

My husband however was a higher rate tax payer. Should he be declaring this on his next tax return? For the benefit of posters further down no tax evasion is being saight here. Just advice so we can have the best chance of staying afloat whilst my husband tries to set up a business from scratch

[Deleted User]

He may as well pay the additional tax now, rather than wait for it to be unearthed, where it may become more expensive.

Dazed_and_confused

I didn’t pay any tax last year so I should get £1000 back.

Why do you think it will be £1,000?

My husband however was a higher rate tax payer. As he was only taxed 20% should he just keep quiet and not fill in the R40 form? I’m worried they might turn around and rather than give him £500, demand that he actually coughs up another few hundred quid.

How have you calculated it will be £500?

Roughly what was his taxable income without the interest? It is quite possible for a higher rate taxpayer to still be due a refund of the tax deducted on the PPI, it all depends what other taxable income they have and how much the PPI interest was.

Seems an odd point of view to be happy claiming the tax back yourself and thinking of your husband deliberately evading tax.

gingergirl21

£1000 is my personal allowance right?

Dazed_and_confused

If "last year" means the 2018:19 tax year then the Personal Allowance was £11,850.

There is no separate "allowance" for savings interest however depending on your other taxable income in the tax year concerned you could have upto £17,850 taxable savings interest before any tax is actually payable.

If you were earning (wages, company benefits rental income, business profits etc) more than £16,850 in taxable income then it might be £1,000 of the interest is taxable at 0%. Depending on how much normal savings interest you received in the year (this doesn't have tax deducted at source) then you could potentially be due a refund of about £200.

[Deleted User]

gingergirl21 wrote: »

£1000 is my personal allowance right?

You need to understand that the figure above refers to the amount that won't be taxed, not the amount of tax you stand to be refunded.
As "Dazed and confused"says above, a more realistic refund figure is around £200.

ash28

gingergirl21 wrote: »

Hi there

It’s time to claim tax back on PPI. my husband has just been made redundant so would really help.

We were pretty fortunate last year and the tax on the interest payments were about £3000.

I didn’t pay any tax last year so I should get £1000 back.

My husband however was a higher rate tax payer. Should he be declaring this on his next tax return? For the benefit of posters further down no tax evasion is being saight here. Just advice so we can have the best chance of staying afloat whilst my husband tries to set up a business from scratch

Did you and your husband have separate PPI claims?
If you did and you are claiming tax back in your own right as a non tax payer, I can give you my experience of claiming some of the tax paid on the statutory interest. The tax year was 2018/19.

I have a small private pension of £7103 and no other income of my own.

PPI statutory interest £18175.....tax paid £3635

So total income (Pension + PPI interest) = £25278

Minus Personal Tax Allowance - £11850 (2018/19) = £13428

Taxable income £13428
Then apply Income tax rates
0% starting rate £5000

0% Personal savings rate £1000


Basic rate 20% on £7248


Total income tax due on £7248 = £1485
Tax already paid - £3635
Refund £2149

That was my experience as a non taxpayer with a low income. It was quite easy to work out to be honest and knew before I applied roughly how much it would be.

My husband is a basic rate taxpayer and has also received a PPI payout, however he will probably get £200 of the tax back based on the personal savings rate of £1000.

Your husband would have had tax deducted at 20% on the statutory interest when it probably should have been 40% as he is a higher rate tax payer. Even with the savings allowance he could owe HMRC...depending on how much interest he received.

Dazed_and_confused

Very useful update but one thing is wrong,

Then apply Income tax rates
0% starting rate £5000 (only for non taxpayers)

The (savings) starter rate is actually available to some taxpayers. If your pension had been say £14,850 you would still have got £2,000 of the savings starter rate band. It is only where your pension, salary, rental income, business profits etc get to your Personal Allowance + £5,000 does the savings starter rate no longer apply.

ash28

Dazed_and_confused wrote: »

Very useful update but one thing is wrong,



The (savings) starter rate is actually available to some taxpayers. If your pension had been say £14,850 you would still have got £2,000 of the savings starter rate band. It is only where your pension, salary, rental income, business profits etc get to your Personal Allowance + £5,000 does the savings starter rate no longer apply.

Thank you for your correction - I have amended my post to reflect it by removing the reference to non taxpayers.


The knowledge on this board is amazing!!

gingergirl21

Thanks. I have been researching this and I was a non tax payer last year (or it will end up that way when I do my first tax return as after expenses it's about £9000. The interest earned was about £9000 so I should get tax back on £6000 as I had no other interest on savings. I will have to do this as my tax return though not an R40 although I can do an R40 for previous years as I was employed.

Dazed_and_confused

I think you have misunderstood how your tax is calculated.

If you have total taxable income of £18,000, consisting of £9,000 business profits and £9,000 interest the the calculation would be,

£9,000 (profit) less £9,000 of your Personal Allowance = £0 of the profit needs to be taxed

£9,000 (interest) less £2,850 remaining Personal Allowance = £6,150 of the interest needs to be taxed.

Tax due on the interest is
£5,000 x 0% = £0.00
£1,000 x 0% = £0.00
£150 x 20% = £30.00

So your tax due for the year is £30. Anything over this will be overpaid although in practice your Self Assessment tax calculation will also include Class 2 and Class 4 National Insurance reducing any actual refund slightly.

This all assumes you haven't applied for Marriage Allowance.

And yes, if you are filing a Self Assessment return for the year then an R40 doesn't apply. Did you get PPI interest in other years?