PPI Tax Refund from HMRC not as expected!

cagedtony

Hi all - I completed the R40 and i don't think HMRC have got my refund correct.
I had 3 successful PPI claims and had £904.63 taken as 20% tax. I recieved £169.44 interest from other savings that year, therfore under the £1,000 allowance. However HRMC have only refunded £165.39, when they took £904 and i was £831 under the threshold.
HMRC are saying this is correct as they have followed procedure and this is income tax. This can't be right surely?

molerat

What other income did you have in the year ?

Dazed_and_C0nfused

Sounds correct to me.

Looks like you can have £1,000 interest taxed at 0%.  You had used £169 from other untaxed interest leaving £831 to be taxed at 0% instead of 20%.  Saving you £166.

The rest of your interest would be taxed at 20%, which is what the PPI company would have deducted.

The above assumes you aren't a higher rate payer and aren't on a low income either when the savings starter rate of £5,000 taxed at 0% would come into play.

cagedtony

Thanks for both your comments, i work full time at the the normal lower rate tax. I guess i don't see this as 'income' as such, as it was money owed to me. But what you say makes sense, i just thought that i had £904 taken that they shouldn't. Never mind, I still have an extra £165 thanks to Martin Lewis.