R40 - Advice for sections 3.1, 3.2, 3.3 and 3.4

mummalove

Hi, I am hoping someone can offer some advice please.
Briefly, I was lucky to receive 3 x PPI payouts - one in Oct 19 and two in Jan 20.

Using the R40 form, can I claim the tax now or should i wait until the start of the new tax year?  I am a basic rate tax payer.

I am okay with most of the R40 form but am not 100% sure what figures to enter in the sections 3.1, 3.2, 3.3 and 3.4 of the R40.  Please find below a breakdown of the figures I am working with: 

Interest earned from joint savings since April 2019:
£524 + £34.35 + £0.78 = £559.13  (I will divide this by 2, so my personal interest earned is £276.56).  No further interest due before start of next tax year.

PPI payout no1:
A - refund of payments made by you for PPI cover based upon comparable policy = £1314.24
B - redund of interest charged on PPI premiums charged on comparable policy = £1251.33
C - Statutory compensation = £3240.07
Income tax deduction = £648.01
D - total refund payable = (A + B + C - TAX) = £5157. 63 - cheque received Jan 20

PPI payout no2:
A - refund of payments made by you for PPI cover based upon comparable policy = £1314.24
B - redund of interest charged on PPI premiums charged on comparable policy = £1251.33
C - Statutory compensation = £3240.07
Income tax deduction = £648.01
D - total refund payable = (A + B + C - TAX) = £5157. 63 - cheque received Jan 20

PPI payout no3:
full refund of PPI payment = £1.72
associated interest = £15.59
8% interest = £19.78
Gross redress amount = £37.09
Income Tax deducted = £3.96
Net Interest paid to you = £15.82
Net offer to be paid to you = £33.13 payment received Oct 19

I would really appreciated it if someone could please work this out for me as I want to ensure I submit the form correctly first time.

Many thanks.

3.1 = ?
3.2 = ?
3.3 = ?
3.4 = ?

Dazed_and_C0nfused

"Interest earned" is untaxed interest so goes in section 3.4

You need to add all the taxed interest together PPI payouts 1, 2 & 3.  That is referred to as statutory compensation on PPI 1 and 2 and 8% interest on PPI 3.  The total of all 3 entries goes in 3.3

The total of all theee income tax deducted amounts goes in 3.2

Deduct 3.2 from 3.3 to give you 3.1

To check you have done it right then

box 3.2 should be 20% of 3.3 and
box 3.1 should be 80% of 3.3

That is assuming you have copied PPI 1 and 2 down correctly.

As a basic rate taxpayer you have up to £5,999 of the interest taxed at 0% so your refund is likely to be in the range of £143 to £1,143.  The more basic rate tax you are already paying the smaller the refund will be.

The refund figures assumes you don't owe any tax for any other reason.

mummalove

Dazed_and_C0nfused said:

"Interest earned" is untaxed interest so goes in section 3.4

You need to add all the taxed interest together PPI payouts 1, 2 & 3.  That is referred to as statutory compensation on PPI 1 and 2 and 8% interest on PPI 3.  The total of all 3 entries goes in 3.3

The total of all theee income tax deducted amounts goes in 3.2

Deduct 3.2 from 3.3 to give you 3.1

To check you have done it right then

box 3.2 should be 20% of 3.3 and
box 3.1 should be 80% of 3.3

That is assuming you have copied PPI 1 and 2 down correctly.

As a basic rate taxpayer you have up to £5,999 of the interest taxed at 0% so your refund is likely to be in the range of £143 to £1,143.  The more basic rate tax you are already paying the smaller the refund will be.

The refund figures assumes you don't owe any tax for any other reason.

Thank you so much.  I would never have worked it out correctly myself.  Much appreciated.

Based on what you are saying, I will enter the following:

3.1 = £5199.94
3.2 = £1299.98
3.3 = £6499.92
3.4 =   £276.56

I assumed I was allowed to earn up to £1000 interest per tax year, so thought I would just be entitled to a refund of £723.44.  I calculated £1000 (allowance) minus £276.56 (interest already earned) = £723.44.

Am I able to submit my R40 online now even though we are not at the end of the 19/20 tax year?

Dazed_and_C0nfused

mummalove said:

Dazed_and_C0nfused said:

"Interest earned" is untaxed interest so goes in section 3.4

You need to add all the taxed interest together PPI payouts 1, 2 & 3.  That is referred to as statutory compensation on PPI 1 and 2 and 8% interest on PPI 3.  The total of all 3 entries goes in 3.3

The total of all theee income tax deducted amounts goes in 3.2

Deduct 3.2 from 3.3 to give you 3.1

To check you have done it right then

box 3.2 should be 20% of 3.3 and
box 3.1 should be 80% of 3.3

That is assuming you have copied PPI 1 and 2 down correctly.

As a basic rate taxpayer you have up to £5,999 of the interest taxed at 0% so your refund is likely to be in the range of £143 to £1,143.  The more basic rate tax you are already paying the smaller the refund will be.

The refund figures assumes you don't owe any tax for any other reason.

Thank you so much.  I would never have worked it out correctly myself.  Much appreciated.

Based on what you are saying, I will enter the following:

3.1 = £5199.94
3.2 = £1299.98
3.3 = £6499.92
3.4 =   £276.56

I assumed I was allowed to earn up to £1000 interest per tax year, so thought I would just be entitled to a refund of £723.44.  I calculated £1000 (allowance) minus £276.56 (interest already earned) = £723.44.

Am I able to submit my R40 online now even though we are not at the end of the 19/20 tax year?

Think you are getting confused.  You can earn as much interest as you want a year 

If you are paying a lot of basic rate tax then you will only get about £140 tax refund.

It is £1,000 of interest which will be taxed at 0% instead of being taxed at 20%.

You have already had £279 with no tax so that leaves £721 to be taxed at 0% instead of 20% so £721 x 20% tax saving = £144.

It might be more if your taxable wages/salary is less than £17,500.

How would you submit it now without your P60 details?

mummalove

I meant I could earn £1000 interest taxed at 0%

I am sorry just do not understand the £721 calculation part. I assumed the tax paid on the interest would be mine to claim back?   Are you estimating I would only receive £144 ?  

I asked if I could claim it now or would have to wait until next tax year?  Of course I have my gross income to date on my current wage slip.  From your comment I guess I should wait? 

Dazed_and_C0nfused

Ymummalove said:

I meant I could earn £1000 interest taxed at 0%

I am sorry just do not understand the £721 calculation part. I assumed the tax paid on the interest would be mine to claim back?   Are you estimating I would only receive £144 ?  

I asked if I could claim it now or would have to wait until next tax year?  Of course I have my gross income to date on my current wage slip.  From your comment I guess I should wait? 

The R40 is for the whole tax year so until you have your payslip at the end of March/early April you won't be able to complete the R40 so yes you need to wait until then to complete it correctly.

If we assume that you cannot use the savings starter rate of tax (this gets reduced to nil the more your wages or pension income is) and the interest doesn't take you into the higher rate tax bracket then your interest will be taxed like this.

£1,000 x 0% = £0.00
£5,779 x 20% = £1155.80
Total tax due = £1155.80
Less tax paid = £1299.98
Tax overpaid £144.18

This is before any tax due on your wages or pension is taken into account.  This is typically just a pound or two hence the actual refund being maybe £142-143.

Marie9091

Hi following on from above post this is a claim for 2017-18

total refund £6353.20
plus compensatory interest £6388.77

payment due £12741.97

less tax £1277.75

Total due £11464.22

what goes where?