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Reclaiming Tax paid on PPI payout

CharlesD
Posts: 16 Forumite
Hi all!
Thanks for any input and help! I was successful a PPI claim on behalf of my partner back in 2017 against Bank of Scotland. It was a pretty interesting case I think.
My partner had been paying PPI for a long time following a postal application credit card which was deficient in information and involved no assessment of his situation. Due to the length, magnitude of the debt, very high credit interest, and high rate of PPI - we got an amazing payout of £14,506.85.
Having recently read the MSE post about reclaiming tax on this - i've been trying to look into it, and have actually filled the online R40 form with HMRC to try and reclaim. However it looks like the amount they are refunding is a lot less than I expected and wanted to double things with the community (my maths and understanding may have created false expectations, but my sceptical).
We are due to receive a letter soon which will say we are being refunded £188 but I'm not sure how they have arrived at that figure yet (assume the letter will contain details).
The Payout included compensatory interest as follows:
Gross interest: £3,546.74
tax: £709.34
Net interest: £2837.40
Around this time we were early on in the process of trying to clear all my partners debts, so he had very little in the bank - that year he earned I think £56 in interest from other sources.
With this in mind is it likely we would be able to reclaim any of this tax?
Many thanks!
Thanks for any input and help! I was successful a PPI claim on behalf of my partner back in 2017 against Bank of Scotland. It was a pretty interesting case I think.
My partner had been paying PPI for a long time following a postal application credit card which was deficient in information and involved no assessment of his situation. Due to the length, magnitude of the debt, very high credit interest, and high rate of PPI - we got an amazing payout of £14,506.85.
Having recently read the MSE post about reclaiming tax on this - i've been trying to look into it, and have actually filled the online R40 form with HMRC to try and reclaim. However it looks like the amount they are refunding is a lot less than I expected and wanted to double things with the community (my maths and understanding may have created false expectations, but my sceptical).
We are due to receive a letter soon which will say we are being refunded £188 but I'm not sure how they have arrived at that figure yet (assume the letter will contain details).
The Payout included compensatory interest as follows:
Gross interest: £3,546.74
tax: £709.34
Net interest: £2837.40
Around this time we were early on in the process of trying to clear all my partners debts, so he had very little in the bank - that year he earned I think £56 in interest from other sources.
With this in mind is it likely we would be able to reclaim any of this tax?
Many thanks!
0
Comments
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The tax rebate of £188 your partner received from HMRC appears to be correct assuming your partners salary or other (non interest) taxable income uses up his personal allowance. Remember it is only the first £1,000 of interest that has a nil rate tax band.
So your partners refund due is 20% of £1,000 = £200 less the tax due on £56 (£11.20) giving a refund of £188 or thereabouts.
What sort of refund were you expecting and why?0 -
The tax rebate of £188 your partner received from HMRC appears to be correct assuming your partners salary or other (non interest) taxable income uses up his personal allowance. Remember it is only the first £1,000 of interest that has a nil rate tax band.
So your partners refund due is 20% of £1,000 = £200 less the tax due on £56 (£11.20) giving a refund of £188 or thereabouts.
What sort of refund were you expecting and why?
Thanks for the clarification Nearly. I think the part of my brain that got excited when I read the original post by Martin, jumped the conclusion that the personal allowance of £1000 meant that first £1000 of tax due on interest would not be due - and anything beyond £1000 of tax was be.
Because we earned basically no interest (and I didn't think salary would have any involvement with the personal allowance because it was for interest earned) - i jumped to the conclusion that we had wrongly paid ALL the tax taken on the PPI payout.
Still £188 is better than a kick in the teeth, especially since I've learned a bit more about how the tax and personal allowance system works.0 -
My husband and I received a PPI pay out during tax year 2017/18. At the time I was a non tax payer and my husband would have been a standard 20% tax payer. Iam in the process of filling in the R40 in my name In the UK interest box do I put all the interest earned from PPI and Bank accounts or do I half it as our PPI pay out and Bank accounts are in both our names.0
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My understanding Peri is that for interest earned on savings - if its a joint account, then its 50% each for the purposes of working out personal allowance. So if the joint account earned 100£ interest in the year in question, it used £50 of each of your allowances.0
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