If you have received a refund from a lender, you may see that there is an “8%” element included.
This applies in many situations, including PPI, affordability refunds and NOSIA refunds. Often the lender will have deducted basic rate tax from this 8% part.
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. NB I am not a tax expert and cannot give you tax advice on your situation.
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 taxman 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 explains 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.
But you are allowed to earn some interest without paying tax
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 push 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.
Make a claim to the taxman by completing an R40 form
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.
Use a separate form for each tax year. A tax year runs from April to March the following year. 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.
As an example, take the refund already mentioned:
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
From these you need 3 figures for the R40 form. Ignore the refund element – that is not taxable. Instead focus on the 8% element – you want the gross figure (481.27), the net figure (385.02) and the tax deducted figure (96.25).
Here is how you put them into the R40 form:
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.
Don’t use R40 if you submit a self assessment form
The R40 form 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. Instead 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”. Or tell your accountant the numbers if they complete the form for you.
FAQs on getting tax back on these claims
How far back can I go?
You have four years from the end of the tax year in which you received the refund to claim a refund.
So, if you received a refund from a lender in 2021/22, you have until 5 April 2026 to make a claim to the taxman. If the refund happened in 2018/19, you have until 5 April 2023 to put in your claim.
It is now too late to make a claim for refunds that you received before April 2018.
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 an 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 to ask for refunds for all types of debt
Unaffordable car finance – your options
Rob says
Just need a little advise please
Having received a large ppi payout of just over 40k last year. I notice that they took about 4k off for tax. I only work part time and earn 7k a year. Can i claim anything back? Thanks
Ash says
Do you have to claim your self, or if you pay comes from PAYE and tax and everything is calculated automatically and adjusted, will this automatically be returned?!
Thanks for your help.
Sara (Debt Camel) says
You have to claim yourself.
gillian says
hi rob(I work full time and pay tax) I just filled in form r40 on the government gateway website you have to do one form for each year within ten days I received cheques for over 3oo pound for the year 2017 to 2018 and one for over 300 pound for 2019 to 2020 the one I filled in for 2018 to 2019 I could not find all the amounts I had had refunded from payday firms(most of them now gone bust) so I rang the tax office and the lady said it was ok just to put the ones I could find details for and if I later found more details I had up to 4 years to claim I then received a letter for that year saying I had a refund of about 87 pound it was so easy to do took about ten minutes and well worth it
mr smith says
I’m a executor and got taxed on a PP claim, I then transferred the taxed PPI to the beneficiary, who claims the tax back, is it the executor or the beneficiary?
Sara (Debt Camel) says
Do you mean you paid tax or it was deducted from the payment you received?
mr smith says
The bank deducted it at source, so it was deducted from the payment I received, I’m self employed the beneficiary is retired. Also do I need to declare it on self assessment.
Sara (Debt Camel) says
You could talk to LITRG about this or phone up HMRC.
Sophi says
Hi Sara,
I had a measly refund of £23.53 from Wonga due to them going into administration.
And I have recently received £1274.29 from Myjar.
This is how they worked out the payment including the 8% stat interest etc…
“To put things right for you, we propose to refund the interest and charges you paid on the loans highlighted in yellow in the above table, totalling £1,110.72.
We will also include an additional 8% statutory interest calculated on the interest and charges that you paid to us. This amount is subject to 20% tax and this has been deducted, leaving a net interest payment of £163.57 due to you. This brings the total refundable amount to £1,274.29. A tax certificate regarding this payment is available should you require one.”
Do I have any chance at all on getting any tax back?
Many thnx
Sara (Debt Camel) says
so that looks as though the gross amount of 8% interest added was £204.46 and they took off 20% tax – 40.89 – to give net interest of £163.57.
If you are a basic rate taxpayer and you haven’t had any other refunds or saving interest this year, you can reclaim back this £40.89 on the R40 form.
Sophi says
Hi Sara,
Thanks for your help and knowledge.
I am a basic rate tax payer and get paid through PAYE.
No more refunds to claim, except QuickQuid now when they have their online portal going but of course it’s not going to be very much.
I do however with the savings interest have a LISA(Lifetime Isa) and I have put in the full amount this tax year could that go against me in tryna get back my £40.
Thank you :)
Sara (Debt Camel) says
LISAs are tax free – you don’t have to declare any interest there as it isn’t taxable. You aren’t going to get a QQ refund in the 19/20 tax year, it will be in next year.
Sophi says
Thanks for the info and guidance Sara, Very much appreciated! :)
Is it best to wait to the end of the tax year (which is obv very soon) then fill out the R40 form?
Sara (Debt Camel) says
at this point in the year yes, that seems like a good move. Then you can get your end of year income & tax from your P60.
Sophi says
Hi Sara,
Sorry to keep asking questions.
Should I include the amount Wonga had gave me or no?
Should I just put the amount from MyJar?
Thanks again
Sara (Debt Camel) says
Wonga – was this from the administrators or a refund before administration?
Sophi says
After they had gone into administration
Sara (Debt Camel) says
ok, in that case the refund you received from Wonga was all “return of interest” and didn’t include any 8% statutory interest. So it isn’t taxable and you shouldn’t include it on the R40 form.
Beth says
Sorry, I’m being a bit thick! What amounts are we putting in each boxes please? I’ve got the tax figure added up, is it the 8% interest figure we put in the first box or the full redress figure? Thanks in advance for your help.
Sara (Debt Camel) says
Hi Beth, I have added a bit to the article above to make this clearer.
Beth says
Thanks for your help Sara
Kerry Braxton says
I am self employed I have had 3 ppi payments made to me. One payment was collected by a company the others I did myself. Which from do I fill out and how as I finding things hard
Thanks
Kerry
Sara (Debt Camel) says
You need to find out for each of your refunds, how much tax was deducted. Ask for a tax certificate if you aren’t sure. The figures on that are what you will need to put on the r40 form as the article above says.
Julie says
Hello, I’m trying to get my head around how the refund has been calculated by Barclays and what to input into the R40 online form. Any help would be really appreciated. I’m not sure which figures go into 3.1, 3.2 & 3.3? Also do we have to include interest from a savings account for that tax year?
How your refund has been calculated:
Refund of PPI commission = £972.64
Interest on refunded commission=£1494.66
Statutory compensation=£1138.89
Refund of fees incurred due to high commission on PPI=£232.00
Income Tax deduction=£227.77
Total refund you are owed=£3610.42
Pauline says
Hi Julie
Just wondered if you managed to find the answer to your question, as I also have a Barclays refund and unsure of the figures to input.
Sara (Debt Camel) says
Statutory compensation=£1138.89 – goes in 3.3
Income Tax deduction=£227.77 goes in 3.2
3.1 is the 3.3 number minus the 3.2 number.
But yes you have to include any other savings interest during that tax year.
brenda says
i have recieved a ppi payout but was deducted tax before payout how do i get r40 form to fill out, i am retired and dont pay tax
Sara (Debt Camel) says
See this https://www.gov.uk/government/publications/income-tax-claim-for-repayment-of-tax-deducted-from-savings-and-investments-r40
Roly says
Am trying to do my tax return, so can claim back the tax from my claims. Am a little confused as to which option to go with to put it in.
Did you receive any interest, for example, from UK banks, UK building societies, UK unit trusts (or untaxed foreign interest up to £2,000)?
Or
Did you receive any other UK income, for example, employment lump sums, share schemes, life insurance gains?
I put it in originally as bank interest, but when I got my calculation at the end, it didn’t include all of the interest as part of my return – I only made £1800 profit this year, so thought I should be due to receive all of it back?
Can anyone help me out here? Thanks in advance.
Sara (Debt Camel) says
you are self employed? If so, you should enter the 8% interest and the tax deducted from that under “other savings income where tax has been deducted at source”.
Roly says
Yes, am self employed. The only options on the self assessment online are the 2 I quoted in my message. In order to get to the savings interest etc you have to pick the right section or it doesn’t show up as an option to put it in. I ended up putting it in with my bank interest in the end, as I couldn’t find anywhere with the wording you put above in the article or just now! It seemed to make the calculation work in the end! Thanks Sara
martin says
I’m a non tax payer and I have had ppi refund and had tax taken out. Will HMRC automatically pay this back to me?
Sara (Debt Camel) says
No, you need To reclaim it using the R40 form as the above article explains.
Jody says
Hi,
I have a question relating to wonga refunds. My total interest and fees was £731.10 and total compensatory interest was £475.14, total agreed was £1206.24 but following administration I received a total dividend of £52. Is there any tax to reclaim here?
Thanks, J
Sara (Debt Camel) says
No. The dividend paid is being treated as coming from the interest and fees part so no tax was deducted and there is therefore no tax to reclaim.
martin says
Hi,
I’m stuck on the R40 form. I have been living off my savings for 4 years now and haven’t worked so, section 2.1 – 2.9 is asking about my income. Do I just leave this blank?
Sara (Debt Camel) says
no, put in zero.
Presumably, you have some interest or dividends on your savings, so you need to include those in 3.1-3.4, together with the 8% portion of the refund.
Jason says
Hi my wife had ppi payments paid out in 2019/20 we filled a r40 form did the figures sent form of got a reply saying she has to put what tax year she is claiming what do we put she is on Benifits because she has parkinsons what do i put please surely they know exactly when they received the 20% of the companys are they just being funny please help as with things as they are we could do with the refund thanks in advance 🙂
Sara (Debt Camel) says
Sorry but your wife (or you helping her) needs to look at each PPI payout and work out which tax year it was in. Tax years start in April, so before April 2019 would be tax year 18-19, from April 19 to March 20 would did be tax year 19-20 and from April this year would be the current tax year 20-21.
So she may have to make 1,2 or possibly 3 claims, each for a separate tax year. That is the way these refunds work :(
Rene says
Hi all I am going to do my tax reclaiming on the government website but just wanted to know can I add documents as well. I know it usually takes 6 weeks when posting the form but is it quicker doing online with evidence which if able to upload. If so how long does it take for payment? thanks
Sara (Debt Camel) says
you don’t need to send any evidence unless they ask you.
Rene says
Thanks Sara does it get paid quicker if doing it online?
Sara (Debt Camel) says
I don’t know.
heath says
hi sara if i phone rbs for a copy of my ppi refund paper will they send it me
Sara (Debt Camel) says
what do you want and why?
heath says
Hi Sara I lost my paper work for ppi to work out how much tax was taken
Sara (Debt Camel) says
ok, then ask the bank for a copy.
Nicola says
I am so confused. Submitted r40 back in April 20 for tax year 19/20. It worked out roughly £778 I was due back (due to not paying tax) I rang to query it at the end of April and was told I would receive a letter. I also spoke with online chat who said the R40 was under review. As I heard nothing else I assumed I wasn’t entitiled to anything.. fast forward to 14th May I logged on my tax account and it states they have sent me a cheque for over £11,000. This cannot be correct? I’m going to ring them on Monday but really worried I’ve messed up somewhere and am going to get in to trouble.
Sara (Debt Camel) says
gosh. I think phoning them is a good idea!
Nicola says
Yes me too. Don’t understand how they’ve made this big of a mistake, and it’s not been picked up by their systems.
Lynne Goddard says
Hi Sara.
I had a payout of £10500 in August 2017. I shredded the paper work and have asked Wonga for a copy of the tax paid or a letter with the information.
I understand they have gone into administration. I have filled in an R40.
Can I receive a tax refund without this information? X
Sara (Debt Camel) says
No, you need to know how much tax, if any, was deducted. There is no way to guess this.
Mark Hodder says
Hi Sara,
I know this question has been asked before but I have 4 payouts each with different wording. I think I have matched each figure up with each other on my paper work but i’m still unsure of the figures that go into each box.
example:
Refund of payments made by you for PPI cover – £2572.38
Refund of interest charged on PPI premiums and fees – £1131.43
8% interest statutory compensation – £2649.09
Refund of fees incurred due to PPI – £168
Income tax Deductions – £529.81
Total – £5991.09
Sorry to ask but which of these go into which of the boxes 3.1 – 3.2 and 3.3
Thanks
Sara (Debt Camel) says
Refund of payments made by you for PPI cover – £2572.38
Refund of interest charged on PPI premiums and fees – £1131.43
8% interest statutory compensation – £2649.09 – THIS IS THE GROSS INTEREST for box 3.3
Refund of fees incurred due to PPI – £168
Income tax Deductions – £529.81 – THIS IS THE TAX DEDUCTED for box 3.2
Total – £5991.09
3.1 is for the NET INTEREST – that is the gross interest minus the tax taken off.
AMathews says
I had a PPI refund of £972.40 from the 13th of March 2020 and I have to declare some inheritance from my late aunt. The amount was £3000 and I’m a higher rate tax payer. Please explain me how to record this in my self assessment tax return and how this works
Sara (Debt Camel) says
The article above explains what to do about the PPI refund – you will need to know how much tax was deducted and how much 8% statutory interest was paid.
I cannot advise you on on how to complete your tax form for an inheritance, I suggest you take professional advice if you are unsure.
Amathews says
Thank you 😊
Liz says
Hi Everyone
Hope your all staying safe. A little bit of help please I am getting a refund for irresponsible lending from provident and have another claim for mutual loans outstanding at this present time. When is it best to claim the tax back for these. Should I wait till the end of the tax year?
Leanne Thorpe says
I can’t seem to get my head round how to work out what to claim back on the R40 form. Can someone help? I had £27119.99 ppi claim back and then paid the ppi company their commission from this. I just have no idea what to put in the r40 form
Sara (Debt Camel) says
You need to find out how much of that large amount was the extra 8% statutory interest added and how much tax was deducted. As the PPI firm if you weren’t sent this information.
Eileen says
Hi, had a PPI payout from Barclays last year where tax was deducted. The PPI policy was in joint name with my husband & paid back into our joint bank account. My husband pays tax at the basic rate & I don’t pay tax. Who should claim the tax refund on this PPI payout?
Thanks.
Sara (Debt Camel) says
you should each claim back half.
Eileen says
Thanks. Do we claim back half the amount of PPI & half the interest or just half the interest. Sorry if that’s a stupid question!!!
Sara (Debt Camel) says
The only part that is taxable is the extra 8% interest added on., not the PPI itself. You need to give the figures for the 8% interest and for the tax deducted,
Jodie says
Hi could someone help me? When I received my ppi payouts a few years ago I was recieving child and working tax credits. In reading these comments it looks like I should have declared the ppi payments ? My question now is can I claim the tax back on one from two years ago or will this flag up that I haven’t declared them and will I end up owing them money ? Sorry if it seems like a daft question could someone please reply with the answers thanks x
Sara (Debt Camel) says
This problem is only for tax credits, not other sorts of means-tested benefits where refund are treated as capital not income. And it is only the 8% part of the refund that matters. The rest is a refund of your own money, not income.
My question now is can I claim the tax back on one from two years ago or will this flag up that I haven’t declared them and will I end up owing them money ?
I haven’t heard of people having this sort of problem because they make a tax claim, but I suppose it is possible.
Jodie says
So should be fine to go ahead then 😬
Joe says
Help! I think i may have complicated matters by submitting R40 to HMRC.
I had 3 redress upto April 2020 and completed form r40 as tax was taken at my 20% rate. ( earn £21k before tax and married tax)
Refund 1 was £4400 tax paid
Refund 2 was £1100 tax paid
Refund 3 was £3200 tax paid
Now hmrc have written to me saying i need to complete a self assesment as interest i have been paid is over £10k
Sara (Debt Camel) says
it’s normal to be asked to complete a self assessment if your savings income is over 10k. Next year when it isn’t, you can ask HMRC is you can stop completing a self assessment.
joe says
thanks – will I be liable to pay more tax though – that’s what worries me.
Sara (Debt Camel) says
You can only have to pay more tax if the savings income takes you into the higher rate tax bracket (see https://www.gov.uk/income-tax-rates for bands) OR if some of your PPI refunds didn’t deduct any tax (that would be unusual).
Simon says
Good morning Sara,
I received a PPI refund from Barclays recently, I am in receipt of UC from HMRC and now have to advise them of this PPI refund, is it the refund of interest amount that I was charged that I have to advise UC or the Statutory Compensation amount which is higher than the refund of interest. Which bit is considered income and then is any of it considered Capital and do I need to advise this also?
Your help would be appreciated.
Thank you
Sara (Debt Camel) says
For the purposes of UC, none of it is income, it is all capital. Talk to a debt adviser eg your local citizens Advice, if you aren’t clear about the implications for UC.
For income tax, the statutory compensation is treated as savings income.
Audrey says
How do you claim tax back on a refund .received refund from amigo .but paid £296 tax.thank you from audrey
Julie says
Is anyone able to help me with what amounts to put in each box? I’m so confused and can’t get my head around it!
My letter states:
Paid PPI premiums and interest thereon £1,323.27
8% compensation on payments made £1,635.24
20% Tax deduction on 8% compensation – £327.05
Total Redress £2,958.51
(Approximate) Refund Available Net of Tax £2,631.46
premiums paid £1,323.27
Plus interest at 8%. £1,308.19
Sara (Debt Camel) says
these are the numbers you need for the form:
8% compensation on payments made £1,635.24 = GROSS
20% Tax deduction on 8% compensation – £327.05 = TAX DEDUCTED
Plus interest at 8%. £1,308.19 = NET
Julie says
Thank you so much! So
8% compensation on payments made £1,635.24 = GROSS – box 3.3
20% Tax deduction on 8% compensation – £327.05 = TAX DEDUCTED – box 3.2
Plus interest at 8%. £1,308.19 = NET – box 3.1
Is that correct?
Sara (Debt Camel) says
yes, that’s right.
Tom Morre says
I have a 26 year old PPI complaint that the adjudicator as upheld – it has now gone to the Ombudsman for a final decision as Santander don’t want to pay – how often do the overturn these claims?
Sara (Debt Camel) says
Overall FOS Claims, the Ombuagrees with the adjudicator in 90% of cases. I don’t know if the stats are Any different for PPI Claims.
Sophi says
Hi Sara,
So to just claim tax back only from x1 refund, Do I only need to fill the R40 form from 1.1 Personal Details to 3.3 Gross amount?
Please advise.
If there are questions/boxes that don’t relate/you cant answer do you leave these blank? orrr
Many thanks
Sophi :)
Sara (Debt Camel) says
Most people should complete 2.1 – 3.7 as described in the article above. I can’t advise on your tax affairs, if you are self emplyed, ask your accountant to deal with this.
Audrey says
Hi how do you claim the tax back my husband won his case against amigo.but paid £250 tax.
Sara (Debt Camel) says
See the article above.
Sian Porter-Williams says
Hi, I fill in a self assessment form every year. I pay 20% tax. I work full time. I have 6 claims. 1 for 2010, 1 for 2015 and four for 2017, all amounting to:
3.3 – £8661.84 for 8% interest charged
3.2 – £1704. 59 Tax paid
3.1 – £6957.25 The difference
I know this goes against ‘other savings’ on the self assessment form, can I claim for them all when I put my assessment in next, end of this year? What figure can I expect back, is it £1704.59?? Thanks
Sara (Debt Camel) says
Were all these amounts received thus year?
Sian Porter-Williams says
Hi, No I received them in the years that are stated.
Sara (Debt Camel) says
Please read the article above in detail.
As that says:
– you have to make a seperate claim for each tax year a payment was received, not all in the current year
– it covers tax years from 2016. I do not know if you are entitles to any refunds from previous tax years
– you will nee to working out if the 2017 refunds were in the 2016/17 tax year or the 2017/8 tax year
– as you complete a self assessment form, you have to amend the previous years forms. See https://www.gov.uk/self-assessment-tax-returns/corrections. I cannot advise on how to do this.
– if you are a basic rate tax payer, you would onot be able to claim back a maximum of £200 in one taxyear. not £200 per PPI payout in that year.
Les says
Hi
I have submitted 2 seperate R40 forms for 2 claims however HMRC are requesting documentation to prove I had PPI payout. I have paperwork from one claim however can’t find paperwork from the first PPI payout. Can I still claim??
Sara (Debt Camel) says
You need to ask the firm that gave you the refund for a copy of the paperwork.
Lee sharratt says
Morning. I want to fill an r40 in. Had so many refunds. Can’t find the break down of all of them. Most of the refunds were in 2018. Did I read something abort asking the HMRC about a tax certificate. Or a break down on house much tax I have paid on tbe refunds? I would prefer to do it , before being bombarded with companies soon to jump on the claiming tax for payday loans
Sara (Debt Camel) says
The tax certificate is provided by the lender giving the refund, not HMRC. HMRC cannot provide you with a summary – it has usually not linked the information from the lender to individual tax payers, hence you have to submit the claim.
If your emails do not have all the information, there is no alternative but to go back to the lenders and ask for a copy of it.
Lee sharratt says
Few companies gone bust
Sara (Debt Camel) says
Then you need to find the emails – no other way. You cant work this out from the amount you received as you don’t know what proportion of this was 8% added interest (the refund itself isn’t taxable) or how much was deducted in tax.
Teresa Harper says
Hi i filled the r40 form in but they have requested documents from the ppi i claimed but i have not got them anymore, what can i do
Sara (Debt Camel) says
Ask who paid you the refund for the tax details.
Sarah moore says
Can someone help I am so confused I am 20% tax payer and recieved ppi refund in 2019, 9 in total with payout of £9500.
I am trying to do the R40 form but cannot work out what goes where. (This is just one)
Total refund of PPI £1399.73
Statutory interest £1265.17
Less income tax on statutory interest 20% – £253.03
Net offer £2411.87
Can I claim anything back and where do these figures go.
Any help would be appreciated
Stu says
Hi Sara,
My father put in a ppi claim in 2018 while he still could and sadly died before the payout.
The payout was in my name as I was the executor. I wonder if I’d be able to reclaim the tax on this or whether it would belong to the estate and therefore be too complicated to do?
Thanks!
Sara (Debt Camel) says
I’m sorry, I don’t know.
Karen says
Hi I had a ppi claim paid to me of 10485.54 of which 1154.12 was deducted for tax. I’m trying to complete the R40 form to claim the tax back, I keep coming up with different figures for 3.1, 3.2 and 3.3. Can anyone help me work this out?
Thanks you
Sara (Debt Camel) says
You need to know how much of the refund was 8% statutory interest.
Karen says
Hi Sara I have the figures needed today.
Ppi paid 4714.92
8% comp/int 5770.62
20% tax on 8% comp/int 1154.12
Total redress before tax deducted 10485.54
Total paid after tax deducted 9331.42
Is that all you need to help with with the figures for r40 form?
Thanks
Karen
Sara (Debt Camel) says
8% comp/int 5770.62 = gross amount for box 3.3
20% tax on 8% comp/int 1154.12 – tax deducted for box 3.2
then take 3.2 away from 3.3 and you get 3.1, the net interest paid
Karen says
I have called and asked them to send me the documents again
Also forgot to ask am I putting my totals from lasts years p60 for 2.1 or just the year to date as it’s this tax year I put a cross in interim payment.
Sara (Debt Camel) says
NEITHER You need to estimate what your total will be for this year.
If that seems impractical it may be best left until April 2021 when you have your P60 for this year.
Iain123 says
Hi
If you get a refund don’t forget to claim your tax back. I’ve just received £197 from the HMRC for 2019/2020 (you can also claim for previous years). I applied in April but was rejected for not having enough information to support my claim (I kind of winged it on the form). I got my act together and printed off the email responses from Payday loan companies, attached this to HMRC refusal and send it back to Bristol. Seven months in total but worth it.
If I’d got my act together initially it would have taken about three months. If your struggling to get your figures in order just do your best, attach emails from payday loan companies and send it off to Bristol.
Martin says
Hi Sara, I have approx. £10500 in redress from payday loan companies for tax year 2016/17. I have tried to obtain the breakdowns required but am finding it difficult seeing a lot of the companies have went into administration or are no longer operating. Going by what Iain has done, do you think if HMRC reject my claim in the first instance I provide evidence by way of letters /emails etc later or should I just go ahead and send this information now. (even though I would not be able to accurately fill in 3.1 -3.3) Any advice is most welcome. Thank you so much for this form and your help.
Sara (Debt Camel) says
You need to complete the form accurately. If you don’t know how much of the 10,500 was 8% interest or how much tax was taken off, you can’t.
Mary says
Mr lender said in the email they are not obliged to do so as a business at this stage. I’ve emailed them back to ask them to expand on this as I can see if it went to FOS they would ask them to add the 8%.
Mary says
Here is the response:
Thank you for your email.
8% interest is something that the Financial Ombudsman Service may include in their decisions.
However, as advised as a business we are not obliged to include this with our refunds.
If you require anything further please contact us.
What are your thoughts Sara?
Sara (Debt Camel) says
Mr Lender tell me they are adding 8% interest. Is it possible they told you they were not deducting any tax from this?
Mary says
Initially I asked whether they had deducted tax as I was trying to work out if I could claim it back. I received this response:
We can confirm we have made no tax deduction on this figure as we have not applied 8% interest.
This is not something that we are obliged to do as a business at this stage.
That is when I went on to question if they should be adding 8% interest. Is there someone else at Mr Lender I should be speaking to if they are saying to you they add it on? He has since just basically told me I can take it to FOS when I explained about the FCA information you shared.
Sara (Debt Camel) says
You could point out that DISP 1.4 (from the FCA’s regulator handbook https://www.handbook.fca.org.uk/handbook/DISP/1/4.html) says that firms should determine complaints in the same way that FOS would to minimise the number of complaints sent to FOS. Ask why this doesn’t apply here, as you could put in a complaint and send that to FOS?
Melanie Sharman says
I have just had it confirmed that my R40 has been processed an I am due £407. How long do HMRC cheques usually take to come through?
Julie M says
I posted 2 R40 claim forms to HMRC for 2 different tax years. Their site claims 4 weeks to assess but i was told up to 6 months when i called for a progress update. How long did it take for HMRC to make a decision on your R40 claims please?
JR says
Hi Sarah, me again! I’m trying to claim the tax back for some refunds I’ve had. What if I don’t know what interest or tax was paid? How do I find that out
Sara (Debt Camel) says
ask the lender – it’s the only way.
scott says
hi i tried to fill in the r4o form via the goverment gateway i put in what i though were the right answers i then recieved a letter back saying that i need to put the name of the company who payed me but i cant remember seeing anywhere on the form where it asks me to name the company who payed the interest
Sara (Debt Camel) says
I suggest you reply with the name.
scott says
thanks but he didnt advise me where to reply or how to do it the letter just stated i will need to registered a new form but im sure the form has no where for me to put the details of the company in this case provident
Sara (Debt Camel) says
Then go back and say that.
scott says
ok thaanks i had never thought of doing this thanks for your help and detailed response
Pearster says
In 2017 I received a ppi for £11500, they took tax off at £1333 based on 20% tax rate, i am in the higher tax rate, what would i be able to claim if anything?
Sara (Debt Camel) says
It sounds like you probably owe the taxman money, see the article above.
Amanda says
Hi Sara,
I am slightly confused with the tax refund on redress. So for example with the money shop. Total interest paid £9500, 20% deduction from 8% compensation interest £1,300 , therefore total potential redress of £15.000. So although I will only get perhaps 4% of the potential redress am I still able to claim the tax refund of £1,300 as I am a low earner? Many thanks
Sara (Debt Camel) says
No. This tax is never being paid to HMRC so you can’t claim it back.
It is actually likely the ICL will do a deal with HMRC so that no tax is deducted from what you receive, but we will have to wait for the payouts to be sure about this.
Steve says
A question, I have received several payday loan refunds across the last 5 or so years and 1 in the last tax year. I have also had a ppi refund from Debenhams a few years ago. I have always had the requisite 20% tax deduction (presumably on the 8% interest). In January 2017 I moved to the Isle of Man where I still reside. I work full time and pay tax but the IOM is a different jurisdiction, a crown dependant, and not part of the UK. Can I still claim the tax back from the UK? If so how do I go about this?
Kind regards
Steve
Sara (Debt Camel) says
I am sorry, I have no idea. If it is a lot of money it may be worth you talking to a tax professional on the IoM.
Ian says
Hi sara i got a ppi payment from hsbc on the 20th dec 2018 and just claimed on the government site between april 2018 to 2019 would i need to do a claim for april 2019 to 2020 thanks
Sara (Debt Camel) says
You only make a refund claim for the tax year you received the refund.
Ian says
Thanks done it correct then, can i ask so you get tax back on the ppi amount received is this 8% sorry if this is repeating things.
Sara (Debt Camel) says
no, the refund you received will have consisted partly of a return of what you paid – no tax is deducted from this – and partly of an extra 8% added. Only the extra 8% statutory interest is relevant here. Read the article above and look at the details of the PPI refund you were sent.
Ian says
Thanks one last thing if its the government owing this shouldnt they have been in touch anyway ppi firms are on the bandwagon again just claiming for what people are owed.
Thanks
Sara (Debt Camel) says
HMRC usually takes the view that taxpayers should look after their own tax affairs.
Lee sharratt says
Hi. U think it’s likely that companies will take on the tax refund with payday loans.? Like they have with the ppi?
Sara (Debt Camel) says
I am not sure what you are saying?
Lee sharratt says
I’m with a company that are claiming the tax back on some ppi I had. Minus there fee. Do u think similar company’s will do the same with payday loan tax paid?
Sara (Debt Camel) says
good god. What a rip off. Fill out the R40 yourself!
Dan says
Hi – I received a PPI pay out in Nov 2019, total redress £3,436.09. The lender deducted deducted £390.99 income tax @ 20% before making a final payment of £3,030.98 to me. I am a basic rate taxpayer who is finalising their self assessment form and have been advised that I can claim back the £390.99 through self assessment (rather than an R40). Please can you advise which section of the self assessment form can be used to do this as there is no obvious instruction on how / where to do this. Many thanks.
Sara (Debt Camel) says
See the Don’t use R40 if you submit a self assessment form section in the article above.
Jenn says
Hi,
Was wondering if anybody could help me please. I have had several refunds over the last few years from payday loans. I have the HMRC app on my phone and have been completomg the R40 forms online. My question is, there is not a specific place to put that you have received a refund but there are several options after you’ve filled in employment details etc. I’m just wondering is it one of those that indicate your claiming tax back for interest on a refund? Thank you
Sara (Debt Camel) says
The article above shows where you have to enter the refund details.
JJ says
Hi Sara,
I got PayDay loan refunds tax year 2019-2020 total of £10k from three lenders but 20% tax taken off then i got refund from Amigo & Provident (Total £13100 without any tax taken off)
Can i submitted an R40 form for the first three lenders or am i correct in saying that i would probably owe HMRC of tax on the £13100?
Sara (Debt Camel) says
Are you sure Amigo & Provident didnt take off tax?
You need to know the numbers, you can guess from the refund total how much the table 8% element was. For Amigo is is often very small.
So find out what the 8% element and tex deducted was for the three payday lenders. And did out the refund details of Amigo and provident and find out what the 8% amounts were.
JJ says
hi Sara,
yes in Amigo’s Emails are as follows :-
(Loans 2 &3)
“How we reached your refund figure: Your refund is the total £10,910.19 (this includes 8% simple interest) less the total payments your guarantor made across both Agreements £1,163.49. We will contact your guarantor directly to arrange refunding them, plus 8% on top too.”
Loan 1
“In light of this, we have agreed to offer a refund of interest plus 8% simple interest. This is a total of £2,150.03.”
that was all the info that i got, they have not mentioned deduction the 20% tax.
From QQ i got:
● Interest and fees eligible for refund: £ 4209.75
● plus 8% statutory interest £ 2860.27
● less 20% withholding £ 572.07
● Total Owed to you £ 6497.95
——————————————————————–
● Total Refund Amount £ 6497.95
MyJar-
Redress Calculation
Redress £2,678.57
Plus 8% Interest £597.63
Less 20% HMRC Tax (payable on 8% interest) £119.53
Less Outstanding Balance £0.00
Amount payable to you £3,156.67
JJ says
Then lastly Peachy Loans:-
Based on the above, we are prepared to partially uphold this complaint in regards to loans 4-5 as well as
loans 9-15 and offer a refund of the interest you paid on these loans, which is £412.30.
Furthermore although at the time of the first chain of borrowing there were no set rules for lenders on how many
times a customer can extend their loan, the industry good practice was to offer 3 extensions per loan. Due to this
we would also be willing to refund the extension fees you paid for the last 5 extensions on loan 1 and the last
extension on loan 2, as a gesture of goodwill. This amounts to £90.00.
In conclusion, our offer is to refund you a total of £502.30.
Again no mention of 20% HMRC tax deducted.
Should i try a R40 form or better to not to?
Sara (Debt Camel) says
That sounds as though there was no 8% element, so none of it was taxable.
Sara (Debt Camel) says
That Amigo email doesn’t help as it does not say how much the 8% was. From memory Amigo have been deducting tax since late 2019. You need to ask them what the 8% amount was and also ask if tax was deducted.
Chanel says
Hi Sara
I’m trying to do a r40 form but I just don’t understand it could you help me out please this is what I recieved of a profident refund but what numbers go in what box
Paid Above Capital
£10183.93
Notional Interest* (8% simple)
£5645.48
Income Tax Withheld (20%)
£1129.10
Balance write off –
£0.00
Overall cheque refund to be paid to you
£14700.31
I don’t pay tax an on benefits is it worth me applying I’m so confused thanku
Sara (Debt Camel) says
Notional Interest* (8% simple) £5645.48 = the gross amount in 3.3
Income Tax Withheld (20%) £1129.10 = tax paid in 3.2
The net amount in 3.1 is the gross amount minus the tax paid.
yes this is worth doing as you should get all the tax paid back.
Chanel says
Ok thank you so much for your help so just to clarify I am allowed to claim this as I don’t pay tax an just recieve benefits thanks for your time really appreciate it
Sara (Debt Camel) says
yes you can. Some benefits are taxable, see https://www.gov.uk/income-tax/taxfree-and-taxable-state-benefits. But even if you are getting one of those, you will probably be able to get some money back
Chanel says
Hi Sara thankyou I do get one of them benefits it’s the careers allowance which for the year is 3497 so do I have to put that on the form ,I’m also unsure on the r40 form where it states total pay from all employments ? An total tax taken of from employments ? But I do not work so I don’t no what I’m ment to put are you able to help at all
Susan Marko says
Hi, I am doing r40 forms fro. The refunds I from payday loans back in 2017 I remember them emailing me about how much I would get and saying they are taxing it, but I do not how much they taxed on it, as no longer have the email. I have quite a few with this problem any help please as am not very good with maths
Sara (Debt Camel) says
I am sorry I can’t help. You need to know what the 8% interest was calculated and how much tax was deducted. You can’t guess either of those figures if you only know the total you were paid.
If the payday lender is still going, they should be able to provide you with the information.
Ian says
I filled out an r40 form must have filled it in wrong somewhere i got a letter back saying i wasnt owed anything so i went with a company who take 25% i got a cheque back in 8 week.
Sara (Debt Camel) says
No claims company can help unless Susan has the numbers for 8% interest and tax deducted. If she does, there is no need for a claims company.
Ian says
I basically said i had a ppi payout in 2017 that is all my name address etc etc and they sent me a cheque for the 8% i paid in tax
Sara (Debt Camel) says
if you said who the PPI payment was from, the claims co can go to the firm and ask for the details.
if the lender still exists, Susan can do this. If it no longer exists there is nowhere to get the information from.
Julie M says
I have sent in 2 paper R40 forms to HMRC, for diferent tax years during the 1st week of April 2021. Having logged onto my HMRC/GOV account they have been received but now beyond the 28 day processing timeframe it suggests to complete the process. I contacted HMRC by phone and was advised they have set a date now in September to complete the processing for them. I appreciate that as we are at the end of a financial year HMRC are very busy, but is 6 months a typical time frame to assess the claims? Thank you.
Sara (Debt Camel) says
I don’t know.
KarenH says
Hi Sara
I had a refund last year from Lending Stream. Here is the offer which I accepted. I can’t get my head around the 8% tax. Would I be able to claim?
I’m getting in touch to let you know that the business have made an offer to refund the interest and charges paid towards the loans 5 to 28 amounting to £2455.74 (£2238.05 for Interest paid, £15.00 for Fees paid, £253.36 for 8% annual interest, minus £50.67 for 20% mandatory tax withholding in line with HMRC regulations). They’ve also agreed to remove all the entries for the aforementioned loans from your credit file.
Many thanks
Sara (Debt Camel) says
If you are a non tax payer or a basic rate tax payer you can probably reclaim the £50.67 tax deducted from HMRC – see the article above for how.
KarenH says
Thank you Sara. Looking through my emails they did in fact send me a tax certificate so I’ll give it a go & also check other refunds I’ve had.
Many thanks
Caroline says
Hi Sara,
When completing the R40 online, it didn’t ask for any proof to be added (copy of refund letter) and yet when I used the paper form last time I claimed (PPI) it wanted proof attached and posted.
Just wanted to check this is right? How comes they want it with the paper form and not the electronic form?
I see they have processed it but the last time it said a cheque has been sent, this time it doesn’t say anything. I suspect they are going to write to me asking for proof.
Thanks
Caroline
Sara (Debt Camel) says
I think you need to ask HMRC if this is right. Or wait and see if they ask for evidence.
Fleur says
Hi Sara,
I would like to claim back the tax paid out on 2 PPI claims from tax year 2018/2019
At the time was PAYE but went self employed sole trader in July 20.
Can you advise that i can use the R40 to make a claim?
Many thanks
Fleur
Sara (Debt Camel) says
I think this needs to go via your annual tax return – tell your accountant about it.
Fleur says
Thank you so much for speedy response & advice.
Many thanks Fleur
Christine walsh says
Hi Sara,
I am about to fill in R40 to claim back tax paid on a PPI payment from 2018
At the time I worked part-time & was taxed I also received state pension & a monthly pension payment from my late husband which is taxed before it is paid
Obviously I include the tax on on his pension with the Tax from PPi but do I need to add in anywhere the £200 heating allowance?
Many thanks Joyce
Sara (Debt Camel) says
That is a Winter Fuel Payment? If it is, it is not taxable, you don’t need to include it as income on the R40 form.
Christine says
Thanks Sara.
Really appreciate your guidance regarding my query.
Great website!
Many thanks
Christine Joyce Walsh