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  • FIRST POST
    • Catweazel68
    • By Catweazel68 12th Oct 19, 12:59 PM
    • 24Posts
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    Catweazel68
    PPI Tax reclaim
    • #1
    • 12th Oct 19, 12:59 PM
    PPI Tax reclaim 12th Oct 19 at 12:59 PM
    Can anyone please give some advise re tax back on a PPI claim

    Basically I received approx £10k back from several PPI claims in Feb this year. Just over £1200 was taken off at source (tax from interest earnt)

    Now after reading Martins article about claiming tax back on PPI payments, I decided to see how much I could claim back as I am a 20% tax payer. I filled out the R40 form online and worked out that I should get just over £1k in tax back. This is allowing for the £1k personal allowance. I have no other savings so this was the only interest that I earnt in that tax year

    Now HMRC have sent me a letter saying that I am owed just under £200 in tax back. I have called them and they said that things are calculated a bit different when it comes to PPI. I find this strange because the example on Martins website makes sense to me and yet the HMRC lady couldn't quite manage to explain why PPI tax is worked out different. She is sending me a letter which she says will explain in more detail

    Any advice or suggestions greatly appreciated
Page 1
    • Moneyineptitude
    • By Moneyineptitude 12th Oct 19, 1:36 PM
    • 24,901 Posts
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    Moneyineptitude
    • #2
    • 12th Oct 19, 1:36 PM
    • #2
    • 12th Oct 19, 1:36 PM
    , I decided to see how much I could claim back as I am a 20% tax payer. I filled out the R40 form online and worked out that I should get just over £1k in tax back. This is allowing for the £1k personal allowance.
    Originally posted by Catweazel68
    Your personal allowance is not £1000 in actual tax!

    You are simply allowed to earn £1000 tax free.

    Hence your refund is £200.

    Sorry to disappoint.
    • meer53
    • By meer53 12th Oct 19, 7:33 PM
    • 9,557 Posts
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    meer53
    • #3
    • 12th Oct 19, 7:33 PM
    • #3
    • 12th Oct 19, 7:33 PM
    £1000 in interest you are allowed, minus 20% = £200
    • Catweazel68
    • By Catweazel68 20th Oct 19, 5:50 PM
    • 24 Posts
    • 2 Thanks
    Catweazel68
    • #4
    • 20th Oct 19, 5:50 PM
    • #4
    • 20th Oct 19, 5:50 PM
    Your personal allowance is not £1000 in actual tax!

    You are simply allowed to earn £1000 tax free.

    Hence your refund is £200.

    Sorry to disappoint.
    Originally posted by Moneyineptitude
    HMRC website
    Personal Savings Allowance
    You may also get up to £1,000 of interest tax-free depending on which Income Tax band youíre in. This is your Personal Savings Allowance.
    • Moneyineptitude
    • By Moneyineptitude 20th Oct 19, 5:56 PM
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    Moneyineptitude
    • #5
    • 20th Oct 19, 5:56 PM
    • #5
    • 20th Oct 19, 5:56 PM
    You may also get up to £1,000 of interest tax-free depending on which Income Tax band you’re in.
    Originally posted by Catweazel68
    As I said above, it's not £1000 in actual tax.

    You are simply allowed to earn £1000 free of tax.

    I don't know how to put it more clearly and simply.

    The £200 is therefore correct, just as it was two weeks ago.
    Last edited by Moneyineptitude; 25-10-2019 at 12:56 PM.
    • Rainbows19
    • By Rainbows19 23rd Oct 19, 11:40 AM
    • 1 Posts
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    Rainbows19
    • #6
    • 23rd Oct 19, 11:40 AM
    Tax reclaim - deceased husband?
    • #6
    • 23rd Oct 19, 11:40 AM
    I have recently received money back on my PPI this was a joint claim and I have also received money back for my deceased husband. My question is can I claim back the tax for my husbands PPI tax?
    • BoGoF
    • By BoGoF 23rd Oct 19, 1:13 PM
    • 5,443 Posts
    • 5,379 Thanks
    BoGoF
    • #7
    • 23rd Oct 19, 1:13 PM
    • #7
    • 23rd Oct 19, 1:13 PM
    I have recently received money back on my PPI this was a joint claim and I have also received money back for my deceased husband. My question is can I claim back the tax for my husbands PPI tax?
    Originally posted by Rainbows19
    No, there is no nil rate band for the estate to utilise.
    • Electra005
    • By Electra005 24th Oct 19, 3:08 PM
    • 2 Posts
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    Electra005
    • #8
    • 24th Oct 19, 3:08 PM
    • #8
    • 24th Oct 19, 3:08 PM
    I know I will probably come across as stupid, but I am confused by Question 3 on the R40 Form to claim back tax paid on my PPI, I am a basic taxpayer and have no other savings.
    The form from the bank says:-
    Total refund of PPI premiums and associated interest paid to date £801.11
    Statutory Interest £1556.60
    Less income tax on statutory interest (20%) £311.32

    The R40 Form at Question 3.1 says :-
    Net interest paid by bank etc- after tax taken off

    Question 3.2 says :-
    Tax taken off

    Question 3.3 says:-
    Gross amount - the amount before tax taken off

    Question 3.4 says :-
    Untaxed interest not included in box 3.3

    Please can anyone tell me which figures from my bank paperwork go where? I am just going around in circles and can`t get my head around it. Many thanks
    • BoGoF
    • By BoGoF 24th Oct 19, 3:25 PM
    • 5,443 Posts
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    BoGoF
    • #9
    • 24th Oct 19, 3:25 PM
    • #9
    • 24th Oct 19, 3:25 PM
    3.2 = £311.32
    3.3 = £1556.60
    3.1 = 3.3 - 3.2

    3.4 only applies if you had other untaxed interest from savings accounts/current accounts etc
    • Kevin Blackaby
    • By Kevin Blackaby 26th Oct 19, 9:20 PM
    • 1 Posts
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    Kevin Blackaby
    Tax reclaim
    Just a question, is it possible to fill out the R40 form with out the pay out details?
    Kev
    • Moneyineptitude
    • By Moneyineptitude 26th Oct 19, 9:22 PM
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    Moneyineptitude
    Just a question, is it possible to fill out the R40 form with out the pay out details?
    Originally posted by Kevin Blackaby
    Of course not.
    How else could any tax refund be calculated? HMRC will require full details of the payout, the tax paid and any other income you may have had in the relevant tax year.
    • paulb22sky
    • By paulb22sky 27th Oct 19, 4:22 PM
    • 1 Posts
    • 0 Thanks
    paulb22sky
    PPI Tax Confusion
    I am confused by MSE explanations of tax reclaim on PPI - or are HMRC mixing things up with general earnings and income tax... many others also seem to be confused by 'what is actually due to them' when trying to claim back tax charged by the paying banks on PPI payments.

    I have just had (Sept 2019) a successful PPI claim payment from Barclays. But they deducted income tax from the payment before paying me. The numbers suggest they have 20% taxed the 'compensation' part of the claim, but I am sure I saw on MSE chats, that this part is not suppose to be taxable?

    Payout breakdown listed by bank are as follows:

    Refund of PPI payments £760.99
    Refund of Interest charged £571.41
    Statutory Compensation £1993.42
    Income Tax deduction £398.68
    Payment received £2927.14

    (I can only figure out from these numbers, the tax is 20% of the compensation value...?)

    HMRC have replied to my claim for PPI tax back and seem to have lumped the PPI tax claim back, in with a general income tax statement for April 2018-April19... not sure why they have based on last years, if I have just had payment in Sept 2019 shouldn't it be in current year 2019-20? Perhaps just way tax years work...

    I had assumed that PPI tax counted as part of a persons 'savings tax allowance', hence the ability for a standard rate tax payer to claim it back, but I have no other significant savings, so shouldn't I be due the 398.68 back..? Instead HMRC reply seems to pull it all in with my main income/salary and not any savings interest/income.

    Could all be a complete misunderstanding on my part, but I have two queries that MSE chat does not clear up for me:

    1. Should the PPI bank have put any tax at all on the 'compensation' part of the payout?
    2. Should HMRC be addressing it as they have, as general income tax and not counting it as a savings allowance iisue?

    Not sure this brief enquiry makes total sense or includes enough detail, but appreciate any clarification the MSE team or others can provide.
    • meer53
    • By meer53 27th Oct 19, 5:00 PM
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    meer53
    If you pay tax at 20% you can claim back the tax on the INTEREST you have been paid, UP TO £1000 per tax year. If you already receive interest on any savings this will be taken into account.
    • BoGoF
    • By BoGoF 27th Oct 19, 5:38 PM
    • 5,443 Posts
    • 5,379 Thanks
    BoGoF
    Could all be a complete misunderstanding on my part,
    Originally posted by paulb22sky
    It is, without a doubt.
    • Moneyineptitude
    • By Moneyineptitude 27th Oct 19, 5:51 PM
    • 24,901 Posts
    • 14,420 Thanks
    Moneyineptitude
    , but appreciate any clarification the MSE team
    Originally posted by paulb22sky
    There is no way you will receive a response on the forum from anyone at MSE. However, reading through this thread will surely provide the answer you crave.

    Failing all that HMRC will also put you straight.

    To be clear, it is most definitely the "compensation" which is taxed, not the actual PPI refund.
    • Arthurarthur52
    • By Arthurarthur52 27th Oct 19, 6:50 PM
    • 25 Posts
    • 4 Thanks
    Arthurarthur52
    This has confused me as well. My partner received 2 ppi payments this year.
    He is unable to work and has overpaid tax already this year. When he spoke to hmrc they said that the ppi tax taken would be taken into account as income and not the £1000 savings allowed. Therefore if he claims a contribution benefit they would calculate 6 weeks after the claim ended or at the end of the tax year. They didnít suggest that it would be out of the savings allowance.
    • Dazed and confused
    • By Dazed and confused 27th Oct 19, 9:27 PM
    • 5,444 Posts
    • 2,894 Thanks
    Dazed and confused
    Unfortunately the taxation of interest, whether it be from bank or building society accounts or PPI interest is overly complicated and lots of posters on here get very confused with it.

    There is no separate "allowance" for interest

    There is the Personal Allowance, currently £12,500 for those with adjusted net income of £100,001 or less. For those who have applied for Marriage Allowance the Personal Allowance will be £11,250. You cannot have a Personal Allowance greater than £12,500.

    If your Personal Allowance has been used then your interest will be taxed at one (or more) of the tax rates applicable to interest.

    Savings starter rate 0%
    Savings nil rate 0% (also known as the Personal Savings Allowance)
    Savings basic rate 20%
    Savings higher rate 40%
    Savings additional rate 45%

    If you are a basic rate payer earning more than £17,500* in the current tax year from a job, pension, self employment etc then the savings starter rate doesn't apply but you get the benefit of the savings nil rate. This often means people with sufficient PPI interest will get upto £200 tax refund. Not £1,000 refund.
    *£16,250 if you have applied for Marriage Allowance

    For example say you have a job earning £20k. Plus untaxed bank interest of £100 and PPI interest of £2,000 with tax deducted of £400 then your interest may well be taxed as follows,

    £1,000 x 0% = £0.00
    £1,110 x 20% = £220.00

    Tax due on interest £220.00
    Tax deducted from interest £400.00
    Tax overpaid £180.00
    • Arthurarthur52
    • By Arthurarthur52 27th Oct 19, 10:03 PM
    • 25 Posts
    • 4 Thanks
    Arthurarthur52
    That makes more sense. not trying to hijack thread but not sure if I can transfer info over.

    So in our case partners earnings ytd 3000
    Estimated year for year 19/20 £7k

    Interest for year 18/19 600
    dividends from penny shares 86.30

    And has passed his marriage allowance to me.

    Therefore the ppi he received would be refunded in full ?? He has 2 at 900 and 1020.
    • Dazed and confused
    • By Dazed and confused 27th Oct 19, 10:14 PM
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    Dazed and confused
    Interest for year 18/19 600
    That is irrelevant, it's the interest in the current tax year (2019:20) that counts. Assuming your reference to "this year" actually means this tax year.

    Therefore the ppi he received would be refunded in full ?? He has 2 at 900 and 1020.
    That makes no sense

    Surely the PPI has already been refunded?

    How much tax was deducted from the statutory interest/compensation paid with the PPI refund?

    It isn't clear what the £1,020 and £900 figures relate to.
    • Arthurarthur52
    • By Arthurarthur52 28th Oct 19, 12:37 AM
    • 25 Posts
    • 4 Thanks
    Arthurarthur52
    Sorry I said itís confusing. I think as I am trying to do our self assessment for 18-19 and ppi for 19-20 and getting in a mess so I will ignore the SA Figures.

    So for 19/20 he will likely have 7k in taxable income. About £300 in interest from savings as moved half to an isa. Then the tax deducted on the two ppi claims were 900 and 1000.which was 20% of the amount paid. Thatís why hmrc have said that if his earnings are under 11500 he will get the full amount deducted plus the 300 tax already deducted for this year. Does that make sense now.
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