PPI Tax Reclaim - To use or not to use form R40

BlindSourMilkGhyll

A couple of questions please. I haven’t used this forum in recent times so apologies if I am in the wrong section:

Should I still use form R40 to reclaim tax for a previous year (2020) in which I was PAYE only, even though I became self-assessed in the following year and am still self-assessed. The HMRC website just says if you are in self-assessment you must not use form R40 – it doesn’t cover my specific circumstance, and as the phones are off until September (I couldn't get through before they went off, so god knows what they will be like when they turn them back on!) I'm finding it difficult to get any help from HMRC. It would seem obvious that I should use R40, but with HMRC I guess you should never assume!

If you agree that the HMRC advice isn’t clear, I was considering just sending the R40 form through the post with a covering letter saying I was PAYE in the relevant year and believe R40 to be the correct form. When researching where to post the form to, HMRC says I must not include a covering letter. I may just send the completed form with covering letter anyway.  Any thoughts on this?

BlindSourMilkGhyll

Sorry, this should have said "Overpaid Tax" - i.e. I am trying to reclaim the tax already deducted from a successful PPI claim in 2020.

Dazed_and_C0nfused

BlindSourMilkGhyll said:

Sorry, this should have said "Overpaid Tax" - i.e. I am trying to reclaim the tax already deducted from a successful PPI claim in 2020.

Perhaps you could make it clearer which tax year (2019-20 or 2020-21?) the statutory interest was paid in?

If you didn't need to complete a tax return for that tax year and this interest doesn't alter that (unusual if it did but it can do) then you can use an R40.  No need for a covering letter.

You cannot use an R40 for a tax year you have or are required to complete a Self Assessment return for.

Other than the above the most important thing you need to do is actually understand what to include on the R40.

A lot of posters on here seem to include the actual PPI refunds despite these not being taxable and not having any tax deducted from them.  

BlindSourMilkGhyll

Thanks for your reply. Just to clarify, the tax year in which I had the successful PPI claim, and therefore have some tax on interest to reclaim is 2019-20. In that year I was PAYE only. I didn't enter self-assessment until tax year 2020-21. Your comments confirm what I suspected - that it was ok to use the R40 form for that year, but I just wanted a second opinion. Regarding completing the R40 form, I have followed the helpful Martin Lewis notes on how to fill the R40 in, and also the HMRC "Notes for completing form R40." I have it ready in draft form (paper copy) and am happy I have filled it in correctly (I do understand it's only the interest that was taxed). The only decision I need to make now is whether to submit the online version, or post off a paper copy.  Many thanks for your help.

Dazed_and_C0nfused

BlindSourMilkGhyll said:

Thanks for your reply. Just to clarify, the tax year in which I had the successful PPI claim, and therefore have some tax on interest to reclaim is 2019-20. In that year I was PAYE only. I didn't enter self-assessment until tax year 2020-21. Your comments confirm what I suspected - that it was ok to use the R40 form for that year, but I just wanted a second opinion. Regarding completing the R40 form, I have followed the helpful Martin Lewis notes on how to fill the R40 in, and also the HMRC "Notes for completing form R40." I have it ready in draft form (paper copy) and am happy I have filled it in correctly (I do understand it's only the interest that was taxed). The only decision I need to make now is whether to submit the online version, or post off a paper copy.  Many thanks for your help.

You are ahead of the game then as you seem to understand this better than most posters on here who complete R40's!!