PPI tax reclaim query 12 December 2020 at 11:53AM in Reclaim PPI & other insurance 2 replies 82 views

Marksfish

I had a payment earlier this year with tax deducted. The total payment was around £2500 with around £1800 of that interest. By my estimations there should be a roughly 50% refund as a basic tax payer if no other interest, as I have been taxed on the full amount. Would that be right? When filling in the R40 and it asks if you receive income from interest, do I place all of my meagre savings interest (luckily rates are so low!!) and combine it with the PPI interest, or is there a separate area in the online form? I have read the PPI payout thread about the form, but need a "Noddy" guide really.
Thanks for any input.
Mark

dunstonh

£2500 with around £1800 of that interest. By my estimations there should be a roughly 50% refund as a basic tax payer if no other interest, as I have been taxed on the full amount. Would that be right?

No.  Tax on the interest is 20%.  Not 50%.  And you are over the Personal Savings allowance.  So, only the interest up to £1000 will have the tax rebated.

 When filling in the R40 and it asks if you receive income from interest, do I place all of my meagre savings interest (luckily rates are so low!!) and combine it with the PPI interest, or is there a separate area in the online form?

Interest is interest regardless of source.  So, it is all your interest in the tax year.   However, you are not going to know that figure yet until the end of the tax year. 

Dazed_and_C0nfused

You need to complete two different sections of the R40 with regard to the interest.

The statutory interest paid alongside the PPI refund is "taxed"' interest.

Your normal (non ISA) interest is "untaxed" interest.

The amount of refund will depend on how much basic rate tax you are paying in the same tax year. 

Basic rate taxpayers can have upto £5,999 interest taxed at 0% however the more basic rate tax you pay reduces this until you eventually end up with just the savings nil rate (£1,000 taxed at 0%).

"Earlier this year" is a little vague, do you mean the 2019:29 tax year or the 2020:21 tax year?