If you have received a PPI or payday loan refund tax may have been deducted.
Since April 2016 non taxpayers and basic rate taxpayers can probably get some or all of this back from the HMRC!
This article looks at who can claim this tax back and how to do it.
Contents
Why was this taxed?
People often feel cross that they are charged tax on a refund. If you return something to a shop for a refund, you wouldn’t expect that to be taxed, it’s your own money you are getting back.
The tax man agrees – the refund part isn’t taxable.
But if 8% extra interest has been added to your refund, this is treated like interest you get on savings and so it’s taxable as HMRC explain here.
Most lenders deduct tax at the basic rate of 20% from the 8% interest and send this tax to the HMRC.
When they give you details, a line which says “interest gross” is what they worked out the 8% interest to be and a line which says “interest net” has had the 20% of tax taken off. This is an example:
Refund of Interest and Fees: £1,513.06
8% interest net: £385.02
Total settlement: £1,898.08
Tax details: 8% interest gross: £481.27
basic rate tax deduction: £96.25
Here the amount she was sent was £1,898.08. This was the refund plus the 8% interest (gross) less the basic rate tax deducted.
New rules about savings interest from 2016
From April 2016 a basic rate taxpayer is allowed to earn £1,000 in savings interest in a tax year without paying tax on it. So this will save you up to £200 in tax – 20% of £1,000.
This amount is £500 for a higher rate taxpayer – which gives the same refund as 40% of £500 is also £200.
This applies to the 8% interest you have got as part of your refund. This interest is still taxable – that’s why HMRC haven’t changed their page saying that it is taxable.
But the new tax-free band means that many people getting one of these refunds shouldn’t have to pay tax and can claim it back if the lender has deducted tax.
How much can you get back?
This depends on whether you pay income tax and at what rate.
The following are simple cases. Remember if you are close to the top end of a tax band, the 8% being added may puch you over into the next rate tax band.
Luckily you don’t have to do the calculations, just tell the taxman the numbers and he will work out your refund.
If you have a low income or don’t pay income tax at all
If you have an income of less than £18,500 including the 8% on your refund, then all your refund should be tax-free. You should get a refund of all tax deducted.
(Why £18,500? It’s the 2019/20 personal allowance of £12,500 plus the “starting rate of tax on savings ” of £5,000 plus the £1,000 a basic rate taxpayer is allowed to receive from savings tax-free… see Income tax rates and personal allowances for details.)
If you are a basic rate taxpayer
If your income is over £18,500 and you pay basic rate tax, you can get back up to £200 of tax that was deducted.
BUT if you received any refunds including 8% interest with no tax deducted and the total amount of any interest you were paid came to over £200 you will have to pay tax on this – see below for some calculations.
If you are a higher rate taxpayer
The first £200 of any interest should be tax-free.
This is more complicated because the firm has deducted tax at 20% but you should really have paid 40%.
As a result:
- if you had less than £100 deducted, you can claim it all back (as if you double this you will still be under the £200 you can get tax free)
- if you had between £100 and £200 deducted, you can claim back some of this;
- if you had over £200 deducted you owe the taxman more. The extra is the same amount as the tax that has already been deducted LESS £200 which is your tax-free amount.
Complete an R40 form to claim tax deducted
Unless you complete a self assessment tax form (see below), use the R40 form to get some or all of this tax back.
You can apply online or complete a paper R40 form and post it to HMRC – links to these are here.
The online questions are the same as the form, so I’ll just cover using the paper form here.
You have to use a separate form for each tax year.
The current tax year runs from April 2019 to March 2020. Once the tax year has finished, you can claim for all refunds you were given in the last year and you also know how much other income you had during that year (from your P60 or P45) so it’s simple to fill in the form.
If you just had one refund and no other savings interest, you enter the details of your normal income from a job or benefits or a pension in boxes 2.1 to 2.9.
Then you put the details of your refund in boxes 3.1, 3.2 and 3.3. The picture shows what this would look like for the refund example above.
If you had several refunds in this tax year with 8% interest included, add them up and put the totals in these boxes:
- DO include any refunds where 8% interest was added but the lender didn’t take any tax off;
- DO include any interest you received from taxable bank accounts;
- DON’T include the interest refunds or associated interest part of the refunds – these are not taxable;
- DON’T include any interest from tax-free savings accounts, eg ISAs or N&SI accounts which aren’t taxable.
You should get a refund within about 6 weeks! For the example being used, this should be the £96.25 tax that was deducted.
Don’t use R40 if you submit a self assessment form
The R40 form and its online equivalent is for use by people who don’t submit a self-assessment form.
If you are self-employed or have to submit a self assessment for some other reason, don’t use the R40 form, just enter the details of the 8% interest and tax deducted on your self-assessment form as “other savings income where tax has been deducted at source”. The refund you get will be the same.
You can also amend previous year’s self assessment forms if you have just found you can get the tax back fro a PPI refund in 2017 say. See “If you need to change your return”.
FAQs on getting tax back on these claims
Do I have to wait for the end of the tax year?
You can make a claim for the current tax year using the R40 form:
- put a X in box 1.8 on the first page to say this is an interim claim;
- for the boxes in section 2, estimate what your income from work, benefits will be for the whole tax year, don’t just put in what you have received so far.
But if you may get more refunds, it’s best to wait until all your complaints have completed before putting in an interim claim.
What if you get more than £1,000 in added interest during the year?
When the 8% interest on your refunds in a tax year add up to more than £1,000, you do have to pay tax on the extra so you won’t get all the tax deducted back – unless you don’t pay tax at all.
Suppose you had a large refund including £1,400 of 8% interest. The lender will have deducted £280 in basic rate tax but you should get a refund of £200 back.
You don’t have to do the sums and say what the refund should be. Just put the details of the interest and tax deducted on the form and the taxman will do the calculation.
What if not all refunds had tax deducted?
Sometimes you may get a refund with 8% interest added but no tax deducted. These were still taxable. So they need to be included in the “under or over a 200 tax deducted” calculation. It is possible you may end up owing the tax man money in this case.
Example 1
PPI refund includes 8% interest of £800 and tax deducted £200
Payday loan refund includes 8% interest £600 and no tax deducted
Here you had a total taxable amount of 600 + 800 = 1400. 20% basic rate tax on this would be £350, but £200 is this should be tax-free so you should have paid tax of £150. £200 has been deducted for tax so you should get a rebate of 200-150 = £50
Example 2
1st payday loan refund includes 8% interest of £500 and tax deducted £150
2nd payday loan refund includes 8% interest £1600 and no tax deducted
Here you had a total taxable amount of 500 + 1600 = 2100. 20% basic rate tax on this would be £525, but £200 is this should be tax-free so you should have paid tax of £325. £150 has been deducted for tax but this isn’t enough, so you actually owe the taxman 325-150 = £175.
What to do if you can’t pay a tax bill
How 8% interest works for payday loan refunds
Unaffordable car finance – your options
N says
Hi Sara
Just want to check I’ve got this right?!
By the end of this tax yr I’ll have earnt approx 14k in salary income. On 2 ppi claims I’ve received statutory interest totalling £1866.37 and paid interest at 20% on this, so I’m going to claim for a tax refund of £373.33.
Due to starting savings rates and personal savings allowance I am right in thinking that because of this I am entitled to the full refund of £373.33? As long i I don’t recieve interest on any other savings – which I don’t.
Thanks N
Sara (Debt Camel) says
Yes that sounds right.
N says
Great thanks!
Only other thing I’m concerned about is that I claim child and working tax credits – I’m going to have to declare the £1866.37 as income to them at renewal aren’t I??
N
Sara (Debt Camel) says
Yes but they only apply for this tax year, not next. See https://www.moneyadviceservice.org.uk/en/articles/how-do-savings-and-lump-sum-pay-outs-affect-benefits and talk to your local Citizens Advice if you are unsure how to complete the renewal pack.
N says
Ok great will make sure I declare it this tax yr then. Will give them a call to clarify as well.
Just found your website – great info and thanks for your speedy responses to my queries this will be my first stop I future 👍🏽
Graham says
Hi Sara
Really need some help filling out this R40 form. I have finally received my settlement figures from quickquid so should receive the refund soon. Below is all the interest from all the payday refunds I received with the exception of sunny loans as they never provided a breakdown show tax deductions.
Express finance bromley (payday expess? £87.52
Mr lender £61.10
24/7 money box £36.16
Quickquid £248.23
Total interest deductions £433.45
What figures do I put in each box?
Sara (Debt Camel) says
Sorry you have to know for each lender, including Sunny, the total amount of the 8% calculated and the amount of any tax deducted.
Graham says
Thanks for the quick reply. This is the full breakdown.
Tax deductions
Express finance bromley (payday expess?
Interest Paid £967.24
+ 8% interest £437.24
Less 20% tax withheld from interest £87.52
Total Redress £1317.33
Mr lender
Interest Paid £600.50
+ 8% interest £305.51
Less 20% tax withheld from interest £61.10
Total Redress £940.91
24/7 money box
Interest Paid £426.01
+ 8% interest £180.80
Less 20% tax withheld from interest £36.16
Total Redress £570.65
Quickquid
Interest Paid £2446.13
+8% Interest £1241.17
Less 20% tax Withheld from interest £248.23
Total Redress £3439.07
I just need to no what figures to input in each box. I will have to email sunny loans for there breakdown before I submit the form.
Thanks.
Sara (Debt Camel) says
So you add up the”+8% Interest” numbers, including the one from Sunny, and put that in the “gross amount” box on the R40.
Then you add up the “less 20% tax withheld” numbers, including the one from Sunny which may be zero if they didnt deduct any tax, and put that in the “tax taken off” box.
Then you take the gross amount you have calculated and subtract the tax withheld amount you have calculated and put it in the “new interest paid” box.
Most basic rate taxpayers with those numbers should get £200 back.
Graham says
Perfect! Really Appreciate your help. I just checked the Sunny loan and no tax was deducted of that one. I will get the forn filled out.
Michael says
Hello. I really need some help with filling out an R40 form online in light of a recent PPI payout (Barclays Loan)!
Breakdown (as per recieved letter):
Refund of PPI premiums paid : £737.86
Refund of interest charged on the premiums paid : £86.03
Statutory compensation : £1095.77
Less any previous successful claim(s) : -£0.00
Less any previous refunds made directly as a result of this policy : -£0.00
Lee any statutory compensation already paid : -£0.00
Deduction from statutory compensation interest for income tax at 20% : -£219.15
Total refund due : £1700,51
Assuming I am looking at the correct R40 section, I am being asked:
Net interest paid by banks, building societies etc, purchased life annuities and PPI payments (After tax taken off) : £???
Tax taken off the gross interest paid by banks, building societies and purchased life annuities : £???
Gross interest paid by banks, building societies and purchased life annuities : £???
Do you receive interest that has not been taxed at all? Yes/No
I need help filling in the blanks (???). Many thanks in advance!
Sara (Debt Camel) says
The bit of your refund which is taxed is the statutory compensation so £1095.77
That has had £219.15 taken off (you will see that that is 20%)
So the net interest paid for this refund is 1095.77 minus 219.15.
I can’t tell if those are the numbers to go into the R40 form as it will depend on whether you received any other taxed savings interest. Also I don’t know if you received any gross interest on your savings elsewhere.
Michael says
Thank you so much! As for your other considerations (thanks for these), the answer to both is ‘no’, so I will enter the figures as per your guidance. Thanks.
I says
Hi, Thanks for all the info on your pages – most informative. Hope you can assist me as I expect my PPI refunds to take me into the higher rate tax bracket from what I have gleaned on this site. I am a basic rate tax payer without the PPI refund. But confused as I was under the impression that one could have earned income up to £ 17,500 and not have to pay any more tax on the PPI refunds already taxed at 20%
My questions are : 1) Am I correct the interest paid is added to earned income and the total is classed as ” income ” and therefore if the total is over £ 33,500 for the tax year 2017-2018, (after the personal allowance of £ 11,500 is deducted) then one becomes a higher rate tax payer by default?
Tax was deducted at 20% from the payment made to me, but I assume a further 20% would be due?
and 2 ) how do HMRC treat the payment in advance due since the PPI interest is a one of event ?
Sara (Debt Camel) says
Tax is only due on the 8% interest element, not any associated interest.
If you are taken over into the higher rate bracket, additional tax is only due on the part that is in the higher rate bracket, not it all.
Advance payment, you can just ask for them to be reduced – to zero probably – as the PPI refund was a one-off.
Sali says
In respect of the question above, I currently earn £17,000 and have received PPI refunds this financial year. The clam was made through a company who have paid HMRC direct, this totals around £1200 (rough figure as I do not have it in front of me). I am quite confused as to whether I should claim this back? The letter from the company says if I have savings under £1000 I can do this – I have no savings.
I have looked at the form but not sure where to start and with the comments about then being a higher rate earner through the payments I don’t know if I should!
Any clarity on this would be greatly appreciated.
Sara (Debt Camel) says
If the HMRC payment was £1200, then presumably the 8% element of your claim came to about £6000?
Then £6000 is treated as income. if you earn £17,000 that is nowhere near enough to take you into paying higher rate tax – that starts at over £40,000. So you i think you should try to claim £200 back. You should have been sent all the figures on the refunds by the claims company.
Pam Poole says
Does mbna stop tax when paying back ppi . Also and send it to tax man Does Mark’s and Spencer deduct tax
Sara (Debt Camel) says
When you get the refund, it will say if tax has been deducted.
Mr&MrsC says
Thank you for this Sarah. I have just got £141 and £125 back from HMRC for two lots of refunds from ppi. Took minutes to fill in the form and 6 weeks for the cheque to arrive.
TJ2 says
Hi
I received a ppi payout which was sent to the Official Receiver as I had been made bankrupt in 2007 and the refund counted as an asset as it pre-dated the bankruptcy. I have just received a tax statement which advises that I owe a fairly large sum in un-paid tax all related to the compensatory interest paid as part of the claim. This was notified directly to the revenue by the refunding bank. surely I don’t now have to spend over a year paying back tax on an amount of money I never received – this seems more than unfair?
Sara (Debt Camel) says
If you talk to the OR they will normally help you get the tax bill sorted.
Stephen Robson says
Hi
I have received my PPI and the tax deducted and paid directly to HMRC was £1450, I have been told by HMRC I am owed £12.42 (they asked if I wanted a cheque sent immediately and I declined) and I am struggling to understand how they work this out. The gentleman on the phone couldn’t explain really, saying that is how it has worked out and I don’t get the full amount paid – my PPI pay out was round about £7k and I earn £30k so this would not have taken me in to a higher tax band. Does any of this sound correct? They told me my paperwork would be sent in about three weeks and I have already been waiting 7 that’s why I phoned.
Sara (Debt Camel) says
It sounds odd – but you need the paperwork to see what they have calculated.
Joanne Tobertson says
Hi
I was wondering if you can help with making the decision if I should bother completing the form r40.
I earn £19406 and I got back some money from ppi, the tax deducted totalled £214, is it worth me asking fome the tax back?
Sara (Debt Camel) says
From what you have said, you should be able to get £200 back. You aren’t close to the higher rate tax band, so there shouldn’t be any problems.
Nats says
Hi Sara,
Just querying something. I received a 4k redress from WDA in July last year which they withheld tax from. I do pay tax but am below the higher rate band. What can I claim back for this? just £200? Thanks in advance
Sara (Debt Camel) says
yes, just £200 in each tax year. Not £200 per refund.
Neil says
Hi,
Do you have to have a tax deduction certificate from the lender in order to be able to claim the tax back?.
I asked Ferratum for one two weeks ago and they haven’t replied . When i called them up they said to e-mail customer care so I did and still nothing.
The adjudicator said in his assessment of my case that they must provide one if I request one.
Sara (Debt Camel) says
You don’t need to include the certificate with your form to HMRC and I don’t think they ask many people for one… but if you are asked you will need to produce it. I suggest you email Ferratum again with COMPLAINT in the title and say if they don’t send you one you will be sending FOS another complaint and asking for compensation for the hassle.
Trev says
Hi Sara
Sorry I have a question regarding tax refund. I have read your section on this issue and wonder if you could just clarify some questions?
(Apologies – Tax always confuses me!)
During Tax Year 2017-18 I received three substantial refunds and received the 8% interest with the 20% tax reduction paid on each one.
The total tax paid on the interest for each was £1100, £180 and £97 respectively. I am on the 20% tax income bracket.
My questions are:
1. Would I be entitled to a tax refund on these amounts? (Is the tax free total capped at £1000 for the financial year on each amount or the total?)
2. The refund of monies other than the interest is definitely not taxable ? (Don’t want to seek a refund and find they want to tax that as well!!)
3. To claim, do I have to make separate claims or can they be grouped together on one form ?
I would be grateful for your advice.
Thanks
Trev
Sara (Debt Camel) says
1. £1000 for the financial year on the total, not each payment
2. definitely not taxable! Unless you have received some refunds where the lender didn’t take tax of the 8% element, you should be fine.
3. 1 claim for each tax year is best.
Trev says
Thanks Sara!
So i should just put the one claim in for the £1100 payment and should receive £1000 back and just forget the other 2 payments?
And the refund takes about 6 weeks to be processed?
Sorry – Tax always confuses me…
Trev
Sara (Debt Camel) says
No, you need to add up ALL your refunds and put the total on this form. HMRC need the total because they need to see that it isn’t taking you over into higher rate tax.
Reen says
I will have had roughly about 16000 earned income and tax taken off for about 450 and 90 from refunds, will I be OK to put both on one tax claim although I havent yet received the refund but it has been confirmed today and will most likely get in the 2019/2020 tax year. Reason for asking is I am hoping I can claim all in this tax year as hopefully 2019/2020 tax year I will have more refunds to put in. Thanks Sarah
Sara (Debt Camel) says
I don’t know, I think you may have to ask HMRC. My instinct is that it is the date you receive the payment that matters, so that would push them into next year, but I am not a tax expert and I may be wrong!
Reen says
Thanks Sarah, I am also looking into this and seen I had 16000 earned income (hoping to get my tax refund on this as paid too much tax anyway) plus I received 2367 8% interest less the tax about 473 so I can only claim the 200 back or will I get the whole tax back which I paid. Tax is so confusing on savings!
Sara (Debt Camel) says
You don’t have to specify how much you are claiming back. Just send them the form and HMRC will calculate it.
Angela Cheshire says
Just a quick question regarding tax refund on interest. Can you only claim at the end of the tax year ie interest refunded in April 2019 and tax deducted do you have to wait till April 20 to claim refund? Thanks
Sara (Debt Camel) says
no, you can claim mid-year but then you will have to give estimates for all the rest of your the income that you will get in the year.
Trev says
Hi Sara
Sorry I am really trying to get my head around this.. (apologies for my stupidity!)
The following would be my totals for the financial year 2017/18.
A total of £6905.00 received in 8% interest. A total of £1381.00 taken from this in tax.
Am currently on the 20% tax bracket (£25K income).
What would me refund be (if any?)
I promise I will leave you in peace after this!
Thanks
Trev
Sara (Debt Camel) says
from what you have said, £200
Lesley says
Hi Sara
Would you please be able to clarify something for me. I have just received £1099 from a ppi claim:
£1205.02 awarded and 105.48 (tax deducted 20% of 8% statutory interest £527.39. Is this worth claiming back by via a R40
My salary is £17,000 but I also get working tax credits and child tax credit. Will this effect this if I do claim.
Thank you
Les
Sara (Debt Camel) says
Its up to you if you think it’s worth filing out the form to get the refund. Asking for a refund shouldn’t affect your benefits.
Paula says
Hi I earn £23800 a year I received a ppi of 2798 ,£300 taken for HMRC would I be able to claim refund?
Sara (Debt Camel) says
From what you have said, you should be able to claim back £200 of that tax deducted.
Karen says
Hi Sara
We have had successful PPI refunds and hsve heard we can claim back refund on the tax paid .not sure if this applies to us as our circumstances changed and we no longer pay tax . We have no savings. One PPI was taxed in the region of £800 and the other in region of £1200. Should we complete R40 for HMRC or does it not apply to us . Thanks
Sara (Debt Camel) says
If you are a basic rate tax payer, you can’t get more than £200 back, but if you don’t pay tax you may be able to get more. So fill out those forms!
Karen says
Thanks Sara . Most helpful will attempt to get round that form .
Karen Archer says
Hello. I really need some help with filling out an R40 form online in light of a recent PPI payout (Barclays Loan)!
Breakdown (as per recieved letter):
Refund of PPI premiums paid : £165.99
Refund of interest charged on the premiums paid : £45.01
Statutory compensation : £228.92
Less any previous successful claim(s) : -£0.00
Less any previous refunds made directly as a result of this policy : -£0.00
Lee any statutory compensation already paid : -£0.00
Deduction from statutory compensation interest for income tax at 20% : -£45.78
Total refund due : £394.14
Assuming I am looking at the correct R40 section, I am being asked:
Net interest paid by banks, building societies etc, purchased life annuities and PPI payments (After tax taken off) : £???
Tax taken off the gross interest paid by banks, building societies and purchased life annuities : £???
Gross interest paid by banks, building societies and purchased life annuities : £???
Do you receive interest that has not been taxed at all? Yes/No
I need help filling in the blanks (???). Many thanks in advance!
I dont not have any savings etc. so the claim would be this amount just dont know what to fill in…Could you please help
Many thanks
karen
Sara (Debt Camel) says
only the “statutory compensation” is taxable. So from what you have said:
Net interest paid by banks, building societies etc, purchased life annuities and PPI payments (After tax taken off) : £183.14 [that is the gross interest minus the tax deducted]
Tax taken off the gross interest paid by banks, building societies and purchased life annuities : £45.78
Gross interest paid by banks, building societies and purchased life annuities : £228.92
Tim says
Hi Sara
Mi have recently come across this article but I am not sure if it may benefit me.
My gross salary is 50k im paying tax of 40%.
I have payday loans refunds to date totalling around £900 – I still have 5/6 complaints awaiting a final response.
From the article I read I can claim up to £200 back from what has been deducted by HMRC.
Is it worth me pursuing this – given I am paying at 40% tax bracket.
Thanks
Tim
Sara (Debt Camel) says
Sorry you will have to do the arithmetic. You may owe the taxman money.
For any refunds in the last tax year, you can do this now.
For this tax year I suggest you wait until all are resolved and do it once.
Janet says
Hi – I will be claiming my tax back from interest paid on a PPI claim however the payment was made direct into a joint bank account – the PPI claim was in my name – will that make a difference to my claim – will myself and my partner need to claim for it jointly – i.e. 1/2 of the allowance – I am a basic tax payer but he is a non tax payer ?
Sara (Debt Camel) says
I’m not a tax expert, but as the claim was paid to you, I think it should all be claimed back by you.
Paul says
Hi,
If I want to claim Tax back that I paid from successful PPI claims I fill out a R40 form but I don’t have the breakdown letters of how much I paid from the companies it was over 3 years ago. I ask do I need to get them and if so how.
Thanks
Paul
Sara (Debt Camel) says
Yes, you need to know how much 8% interest was added and how much tax was deducted. You should have been sent these details with the PPI refund and now need to ask for a copy of them.
Gary says
Sara,
When filling out the R40 online, I put the claim under UK interest part, is this correct? Only I’ve had the form returned to me with a letter saying tax should not be deducted from bank or building society interest, so it’s like they don’t recognise it as PPI reclaims that have had the interest taxed. They have asked me to send the relevant backup and return to them, so I’ll do that, but I just wanted to check I’d claimed under the correct heading?
Thanks,
Gary
Sara (Debt Camel) says
yes, UK Interest. Let us know what happens!
Oliver says
I got the samething Gary, posted the proof from the banks oabout the 10th of April, heard nothing yet must chaise them up
Gary says
Ahhh ok. I sent all the paperwork last week to them backing up my figures. I’m surprised they’ve not responded to you from the 10th April though. I thought they were supposed to reply with 15 working days. Good Luck Oliver!
Oliver Gunnell says
Got a letter today telling me they agree to a refund and to go online to arrange it be paid within 5 working days, I think I delayed mine because back in April I sent them the proof and figures they wanted with a letter but didnt resend the R40 form back to them after, I realized I probs needed to and sent it about 10 days ago.
Les says
Hi.
A claim for a refund of a mis-sold packaged joint bank account and the refund was paid into that joint account. The payments have had the 20% tax deducted. Can one of the account holders claim all of the deducted tax (up to the annual £1000 allowance of course) back and pass half of it on to the other person named on the joint account? Or must each person claim in their own right?
Sara (Debt Camel) says
Separate claims are needed.
Sarah says
Hi Sara
Apologies if you’ve touched base on this before – But i was on maternity for the best part of last year, so i didn’t pay any tax would this affect me claiming back the tax on my refunds? Also is I’m only currently back at work part time i wont be making over 17,850 so again will this affect me claiming the tax back if i tried to claim in this tax year?
Thanks
Iain123 says
Received £200 today from HMRC. Here’s the breakdown: printed off form R40 from HMRC website and filled it in, took about 10 minutes (only one section really matters and you’ll need all your payday loan information to hand). Posted this on 10th May. They replied on 9th July confirming they owe me £200. They suggested I open a gov/uk/personal tax page and I’d get the money in five days, or wait sixty days and they’d send a cheque. Took about 15 minutes to set up a gov/uk account and I got my money today.
If you’ve had a payday loan refund you’re likely due money from HMRC. If you’ve had a refund since April or are expecting one this year keep the paperwork handy and claim next April.
April says
Hi Sara, Sorry if this has already answered but I can apply for more than just the previous tax year?
So 2017-18, aswell as Apr 18- May 19?
Thanks
A
Sara (Debt Camel) says
yes, going back to the 16/17 tax year. A separate reclaim form for each tax year.
Before 16/17 you can only get a refund if you didn’t pay basic rate tax.
S says
Apologies if you’ve touched base on this before – But i was on maternity for the best part of last year, so i didn’t pay any tax would this affect me claiming back the tax on my refunds? Also is I’m only currently back at work part time i wont be making over 17,850 so again will this affect me claiming the tax back if i tried to claim in this tax year?
Sara (Debt Camel) says
if you didn’t pay tax in a year, you should be able to claim back all the tax deducted.
Chris H says
Hi Sara, I just received my refund from LS and was looking at claiming the tax back on the 8%. Am I able to do this now or do I have to wait until the end of the tax year?
James Rounce says
Hi Sara
Can you advise if I can claim tax back in the below scenario rang hmrc and they said they had never heard of claiming back the tax you pay on the 8% statutory interest.
Refund of £9225 from QQ
£4189 of above figure was made up of the 8% interest.
I was deducted £832.50 (basic 20%). I am a basic rate tax payer as earn below £50000.
I have read conflicting reports that you get £1000 interest free on savings if a basic tax payer thus meaning I could claim all the £832.5 back?
Don’t want to complete the form r40 if I will end up owing the tax man!!! I have no savings at present to declare. I put 6k of redress into premium bonds and believe they are not taxable.
Thanks
James
Sara (Debt Camel) says
You should get the tax deducted on £1000 back, that is £200. Send in the R40 form.
DAVID HARTLEY says
Hi I am a non tax payer just on my government pension £9753 / year
I received 2 PPI payments total interest payed on the 2 accounts paying £2773.
I payed £867 in tax could I get a tax refund for this tax year
stuart says
Hello,
Please excuse my ignorance but any help would be much appreciated.
I have had a PPI refund and the tax has already been taken at 20% but I can’t figure out how I claim this back on my self-assessment form .I see from your article that you say to enter the details of the 8% interest and tax deducted on your self-assessment form as “other savings income where tax has been deducted at source” but I can’t find any such box?
Many thanks in advance
Stuart
Bawan says
Hi I’m looking at claiming back tax on a bank charges refund last year can you help ?
So payout was = £9,522.94
Statutory interest at 8% = 3,802.92
20% tax induction on stat interest = £ 760.58
Total was£ 12,565
I earn £14,000 a year
No savings
Would I get the tax back ??
Many thanks
Sara (Debt Camel) says
yes you should do!
Bawan says
Brill thank you sorry I’m useless at that so:
So they are asking for the net interest? Is that the full statutory interest ?
And the gross interest is after the tax taken off ??
Many thanks
Sara (Debt Camel) says
No, gross is the full amount and net is after tax was taken off.
Gross interest is the full statutory interest so £3,802.92
Net interest is 3,802.92 – 760.58 = £3,042.34
eddy says
Hi sara,
Finished all my refunds now,
As im currently outside of the UK and have been for some time , i need to use a different form .
Do you have any examples of how to fill in that form??
Thanks
Sara (Debt Camel) says
I’m sorry I don’t know what that form is.
eddy says
I believe its the form to reclaim the interest deducted for those who are not in the UK and therfore have the personal allowance so we can reclaim.
No problem Sara, without this site i wouldnt have gotten the refunds i got!
thanks for everything!
caroline Batty says
Hi Sara,
We made a joint PPI reclaim in Jan 2016. we are both tax payers do we need to split the claim for tax back on interest the amount of interest paid was just over £1000.
How do I go about the reclaim.
Sara (Debt Camel) says
you should each put in a claim for half. The article above explains how.
lisa says
I am a 40% tax payer – is it worth reclaiming the 20% tax back on PPI payments – or will I owe the tax man more money?
I was paid out in two different tax years – how do they work out what is owed?
Sara (Debt Camel) says
See the If you are a higher rate taxpayer section in the article above.
If your refunds were in two different tax years, you need to do the arithmetic separately for each of those years. You should have a refund but the amount of extra tax you owe may be larger.
Lesley Weate says
I am a non tax payer. I only earn approx 7000 per year My husband is a tax payer at 20%. We had a ppi refund in 2017 from Barclays Bank for several loans we had from them. Do I claim this tax back in my name or my husbands? it was a joint ppi claim ?
Sara (Debt Camel) says
You both submit claims for your half of the refund. You should get back all the tax deducted on your half. Your husband will probably only get back up to £200.
Lesley Weate says
Thank you. We also had ppi claims from paragon and halifax but this was before 2016. Can I still claim as a non tax payer on these. Can i claim on payday loans, we have had several in the past., including wonga, who stopped the debt and quickquid who i am still paying via a debt management plan. We did receive some compensation from Quickquid
Thankyou.
Lesley Weate says
Hi Sara, we have details of tax paid on our ppi claims from 2017. two of the loans were in my husbands name who is a tax payer. so does he just have to fill out one tax form for all ? There is one in joint names, i am a non tax payer, so do we just fill in one form? Or two and split the tax paid? Thank you.
Sara (Debt Camel) says
He claims for the two in his name and the half of the joint one.
You claim for the other half of the joint one and should get all the tax deducted on your half back as you don’t pay tax.
Lesley Weate says
Can he just fill one form in ? and just add up the tax taken ?
So we will just need 2 forms ?
Thank you
Sara (Debt Camel) says
yes, his form needs to include all the refunds he got in that tax year.
Sara (Debt Camel) says
As a non tax payer you can claim for earlier years.
Re Wonga and QuickQuid – did they deduct any tax from your refund?
Sarah H says
Hi Sarah am I right in thinking that i could claim back £79.43 tax? On the redress below Refund the interest and charges paid on loans 3 and onwards: £923.12
• Add Interest at 8% simple £397.16
• Deduct 20% tax withholding on interest: £79.43
• Redress to be paid to Miss Harrision: £1,240.85
• Remove the credit file entries associated with the loans listed above. Thank you Sarah H
Sara (Debt Camel) says
Yes. The tax deducted is what you are trying to reclaim. The 8% interest is the gross amount to put on the R40 form, the net amount is the 8% minus the tax deducted.
Lesleyann Pearson says
I recieved a ppi payout of £8877.16 this was the gross amount before tax, I was told that I could claim back the tax I can’t get my head round it
My net payment was £8148.94 I filled out form to claim it back but I’ve messed up I don’t know what figures I need to put in please help
Sara (Debt Camel) says
Most if the refund wasn’t taxed. Only the part called Statutory Comoensation was. You should have been told how much of the refund was Statutory Compensation – that is the Griss amount that goes on the R40.
Lesley Weate says
in box 2.1 of r40 form, does my husband as a tax payer have to include tax from his job as well as tax paid on ppi claims and just add them up ?
Also, he has a private pension, does he have to fill in box 2.7 and box 2.8 with details of tax paid on this too ? which box does he include ppi tax ?
Thank you.
Sara (Debt Camel) says
in box 2.1 of r40 form, does my husband as a tax payer have to include tax from his job
YES
as well as tax paid on ppi claims and just add them up
NO, the PPI numbers go in section 3 as they are from savings, not employment or pension
Also, he has a private pension, does he have to fill in box 2.7 and box 2.8 with details of tax paid on this too ?
YES
which box does he include ppi tax
IN SECTION 3 NOT SECTION 2
Lesley Weate says
On section 3.1 of R40 form i am not sure what to put in e.g Letter from Barclays which we had with details of refund from PPI
refund of ppi premiums paid £192.00
Refund of interest charged on the premiums paid £963.56
Statutory compensation £742.67
Deduction from statutory compensation interest for income tax at 20% -£148.53
Please could you explain to me which figure should go in section 3.1 and 3.2
Thank you.
Sara (Debt Camel) says
Most of what you were paid wasn’t taxed – it was what you paid being returned to you, not new income – so doesn’t go on the R40.
Only the Statutory Compensation was taxed. The SC is the gross figure for the R40 form. The net figure is the SC minus the tax deducted.
Lesley Weate says
So am i right in saying that we can not claim any tax back?
Thank you
Sara (Debt Camel) says
I don’t know your tax situation. Most basic rate taxpayers can reclaim the tax deducted up to a maximum of £200 in any tax year.
Amy says
Hi Sara
I would like some advice please on the 8% tax deduction. I was one of the lucky ones who received their redress from Quick Quid 5 days before their awful announcement. However, I am concerned that although my payment had the tax amount deducted would they have paid it. Is there anyway I can check this? I have access to my personal tax account but nothing on their currently. I don’t want to owe the tax man any money.
Sara (Debt Camel) says
If you have a statement saying that tax was deducted you are entitled to reclaim that. You don’t have to prove QQ paid that amount to HMRC.
Amy says
The only thing I have is an email with the calculated amounts which was sent by the adjudicator when outlining the offer.
Stephen says
I have received some PPI refunds with tax deducted, just over £1000 – I am self employed and complete a self assessment each year. I don’t earn enough to pay tax, I understand that the R40 form is no good for me.
Can I claim this tax back now or do I need to wait until I submit my next return.
Thank you in advance
Sara (Debt Camel) says
Just include it on your next tax return – in January presumably.
Holly says
I am so confused on how I fill out this form , do I add the tax taken to the total I have paid for the year ? The letter I got back from them was to send details or the back or building society and details of each Individual payment and the year deducted and who I received it from but what section does that go In?
Sara (Debt Camel) says
Your income from employment, benefits and pensions, and the tax deducted from that, goes in 2.1 – 2.9.
The 8% added to your refund is treated as savings. The numbers for this go in
3.1 (the net amount, the 8% total less the tax they deducted)
3.2 (the tax deducted)
3.3 (the 8% added)
Unless you had extra savings income this year, you just put the numbers in from your refunds this tax year.
stuart green says
I’m self employed and earned less after expenses etc than £15000.00 for the tax year 2018-2019. I received a ppi payout and the IR were paid £530.00 tax. I want to claim this back now. What’s the easiest way to go about this as I have already submitted a tax return for this obviously. Do I submit an updated assesment for last tax year and amend something somewhere? Really conflicting info on the web.
Sara (Debt Camel) says
I suggest you ask your accountant or talk to HMRC – sorry I am not a tax expert.
chris says
Sara
I am a high rate taxpayer earning just over £50k and have just received a PPi claim offer which has a tax reduction of £1402 and have not received any interest from any savings this year. Would i be able to claim some of this back or will they tax me at 40% instead of 20% on the total due??
Thanks Chris
Sara (Debt Camel) says
The “If you are a higher rate taxpayer” section in the article above summarised your situation.
Caroline says
Hi could you please help with my R40? The ppi I was awarded was £4835.94. I was then deducted tax at 20% and received £4275.81. ( £560.13 taken in tax). However I haven’t got the figure on my letter stating how much was statutory interest which is what I need for the R40, how do I work this out please? Thank you
Sara (Debt Camel) says
The tax was deducted at 20% so the statutory interest would be 5 x £560.13 = £2800.65
Sarah says
Hi Sara
Please can you help what figure to put in the box…
Refund of 1584.15
Interest added 977.78
Less 20% 195.57
Waiver 562.47
Refund 1803.89
Is a qq refund and I’m claiming back 195 thank you.
Just confused as to what to put in net and gross thank you
Sara (Debt Camel) says
Interest added 977.78 = GROSS
Less 20% 195.57 = TAX DEDUCTED
NET is (977.78 – 195.57) = £782.21
Sarah says
Thank you 😊
Patrick says
Hi I’ve just found out about all this and it’s very confusing but I’m plodding along bit by bit. I’m just starting to get all my redress’s up and get the sum of the 8% interest (am I doi g this right?). The question I would like to raise is if it says ‘20% tax withholding on interest’ are those the ones that should be added or not. Apologises if it’s a silly question just trying to get my head around it all. Thank you
Sara (Debt Camel) says
The sum of the 8% statutory interest numbers on your refunds is the “gross” amount for the R40 form. for box 13.
The sum of the tax deducted goes in box 12 – you are going to get some of that back as your refund.
Not all lenders give the “new” amount in what they send you. If they don’t, it’s the gross amount minus the tax deducted. The sum of the net amounts goes in box 11.
Andy says
One quick note although mentioned, for those who did self assessment in a tax year they want to claim for ( and you can go back four years possibly a bit more ) as said you cannot use the R40.
If you are not able or willing to attempt to claim the tax via a new return you can claim it thriuhtwhat is known as “Overpayment Relief” instead. I did this. Some guides seem biased towards company returns, but the proceedure was easy:
Send a letter to HMRC stating you want to claim this relief. Include your NI and UTR clearly. Attach copies (NOT post originals) of the appropriate pages of the PBA/PPI payout from the bank, you need the page with the figures on obviously!
The letter content can be brief all you need to write is to refer to the enclosed copies and say how much you’ve had taken and would like refund.
Mention that original documents are avail if required (if you have them) too.
Get a free proof posting cert too or pay for signed delivery. Keep a copy of the letter.
Took about seven weeks to reply to the letter, reply also told me the amount due back and expect cheque soon. It arrived two weeks later.
The money they sent was bit more than my quoted one as they sent a small (under two quid) additional sum from a previous year still due to me.
This was a claim for the 2015 tax year, sent Sept 19
So it can be done easily, I did it with no clue as to what to do!
I hope info is helpful. Good luck!