Help needed filling out R40 form to reclaim PPI interest tax

ToTo_Man

We received two successful PPI payouts in tax year 2016-17 and I am in the process of filling out the R40 form to reclaim the 20% tax that was deducted on the interest.  I have the financial breakdown for one of the PPIs but not the other so I'm going to phone the relevant bank to see if they can furnish me with the figures.  

1) Working out the interest received from savings accounts during the 2016-17 tax year has been challenging, as our savings accounts run from Nov-Oct give or take a few days, so there are effectively two different interest rates applicable during a single tax year (one covering Apr16-Oct16 and the other covering Oct16-Mar17).  I have a pretty accurate estimate of it.  Does this figure need to be accurate to the last penny, i.e. will HMRC request bank statements as proof?

2) If the PPI payout was addressed to a single claimant, then believe I only need to declare savings interest received by that single claimant (i.e. 50% from any jointly-held savings accounts).  If the PPI payout was addressed to joint-claimants, then presumably I need to complete two R40s, one for each claimant, each declaring only 50% of the amount of PPI interest received and tax deducted?

3) Section 3.3 of the R40 Guidance Notes says:

"Gross amount: This is the amount before it was taxed. For tax years up to 5 April 2016 you usually receive interest after tax (at 20%) has been taken off by the payer, for example, the bank or building society. From 6 April 2016 banks and building societies no longer deduct tax before paying interest. Enter the gross interest in box 3.4. Bank and building society statements and passbooks may describe these payments differently. We need you to provide details of each account on a separate sheet. Include account name, number, sort code, interest received and any tax taken off.
The last sentence implies is it not sufficient just to add up all the gross interest received from savings accounts during the 2016-17 tax year and write it in box 3.4.  Do I really to include separate details of each savings account on the form?

Dazed_and_C0nfused

1).  Unlikely but why not just ask the bank for the interest for that tax year?

2).  Yes, an R40 is a tax return, like a basic Self Assessment return, so you have to declare all taxable income for that tax year for the individual the R40 is being completed for.

3).  I suspect not for 2016:17 as a few years old now.  But as you are having to gather together that information anyway to complete box 3.4 not sure it is that much of a hassle?  You aren't entering the list on the form, you are attaching an extra sheet with the details on.

ToTo_Man

If the savings account straddles two tax years, and interest is paid monthly, then presumably I total the monthly interest payments received only during the tax year in which the PPI payment was received?

If the savings account straddles two tax years, and interest is paid annually upon account maturity, then presumably this interest payment should only be included if it was received in the same the tax year in which the PPI payment was received?

PS - Sorry for the basic questions but I've never had to complete a tax return / Self Assessment return before.

Dazed_and_C0nfused

Yes and yes.

Thrugelmir

Interest is declared in the period that it's received. 

ToTo_Man

In box 2.1, do I enter the "Total Gross Pay" or "Gross for Tax" from my P60?

Dazed_and_C0nfused

That wording doesn't match the HMRC version of a 2016:17 P60 so impossible to say for certain but probably Gross for Tax

You should have a section called Pay and Income Tax Details that has the information you need.

Did you have two jobs in that tax year?

ToTo_Man

Dazed_and_C0nfused said:

That wording doesn't match the HMRC version of a 2016:17 P60 so impossible to say for certain but probably Gross for Tax

You should have a section called Pay and Income Tax Details that has the information you need.

Did you have two jobs in that tax year?

You're correct, I was looking at the wrong form.  All sorted now (hopefully!).

Just to clarify, the maximum potential tax refund a basic rate tax payer can expect to receive back on the PPI interest payouts in any one tax year is £200 (i.e. 20% of the £1000 personal allowance), is that correct?

Dazed_and_C0nfused

If they have used their Personal Allowance (£12,500) and savings starter rate of tax (up to £5,000 taxed at 0%) then yes £200 is correct.

If the two things above aren't available then any normal untaxed interest would use some of the £1,000 savings nil rate of tax (aka PSA) so it may well be less than £200 for most people.