PPI tax back help 12 January 2021 at 5:49PM in Reclaim PPI & other insurance 8 replies 111 views

Susiemoo

Could someone help please. I was awarded 5 ppi payouts back in 2017.  They totalled approx £8500 before tax and looking at my letters back from the bank £4235 of that was the 8% statutory compensation interest. Also it looks like i paid approx £846 in tax altogether (taken off by the bank)
I work part time and earned £10,200 that year and obviously paid no tax, I earned about £30 in interest in savings also that year. My question is am I able to claim any of that tax back please. I am confused about personal allowances etc and how the statutory interest affects my allowance (not sure if that makes sense?). Any help would be appreciated. Thank you

Dazed_and_C0nfused

Yes.

It has no impact on those sort of amounts.

Did you apply for Marriage Allowance for whichever tax year you are referring to?  2016:17 or 2017:18?

Susiemoo

Thank you for your help and reply.
I have been trying to understand it all as I only have a couple of months left to apply for it back using the R40 form but no idea if I should/could or what figures to use on the form.
I'm not married (only live together) so unable to claim that but thanks for pointing it out.
Thanks again 

Dazed_and_C0nfused

From your latest post I'm assuming this is for the 2016:17 tax year?

If so the tax position would be as follows,

Earnings £10,200
Interest £4,265
Total income £14,465
Less Personal Allowance £11,000
Income to be taxed £3,465
£3,465 x 0% = £0.00 (savings starter rate of tax)
Total tax due = £0.00
Total tax paid £846
Tax overpaid £846

This is all assuming you have disclosed everything relevant to your tax position that year i.e. the £10,200 pay is correct, no other jobs you have forgotten about etc etc.

[Deleted User]

And remember, just in case, you are only claiming tax on the INTEREST element NOT the whole refund

Susiemoo

I was paid out September 2017 (2017/18 tax year?) 
I had no other job/income, I had savings in an account, the interest for the yr was approx £30.00. (Not sure if this is relevant?) 
So it is only the 8% statutory compensation interest (£4265) i received i can claim the tax back on.(£846 taxed in total)
Which amount would I put on my R40 form, I can only see one place where it refers to net interest paid by PPI payment. Sorry so many questions. Thank you

[Deleted User]

You are taxed on interest, just like a bank account. You do not pay tax on the refund.

You are allowed to earn a certain amount per year of interest tax free, after that you pay tax. You are claiming back the tax paid on the interest that was in the interest free banding

Therefore, yes you declare interest of £846 (and the £30 you also earned as it all counts together for the tax year you are claiming for)  

Dazed_and_C0nfused

Susiemoo said:

I was paid out September 2017 (2017/18 tax year?) 
I had no other job/income, I had savings in an account, the interest for the yr was approx £30.00. (Not sure if this is relevant?) 
So it is only the 8% statutory compensation interest (£4265) i received i can claim the tax back on.(£846 taxed in total)
Which amount would I put on my R40 form, I can only see one place where it refers to net interest paid by PPI payment. Sorry so many questions. Thank you

Why couldn't you have said that to start with??

You referred to only having a few months to claim.  2017:18 tax year is still valid for a claim until 5 April 2022.

Anyway the calculation in my previous response is still broadly the same, you would not be liable to pay any tax so could get all £846 back.

You declare taxable income on the R40.  PPI refunds are not taxable income and do not have tax deducted from them.  The statutory interest is taxable.  As is the normal £30 interest.

Susiemoo

Thank you both for your great replies and taking your time out to answer , I apologize for the tax year info,got it in my head this was my last yr to apply for it. I should be able to fill the form out now and reclaim it back. Many thanks for your help