Everyone remembers those annoying adverts around claiming back your PPI, and while frustrating, they did lead to thousands of people receiving repayments. This included interest calculated at 8% on the PPI premiums refunded.
Submitting Your Refund Claims The Correct Way
In the case that the PPI settlement was paid after September 2013, the bank or insurance company should have deducted tax at 20% from the interest element. While this is correct, if the interest received is covered by the taxpayer’s savings allowance of £1,000 or £500, the tax can be reclaimed.
This is quickly turning into another opportunity for a scam, and HMRC is being overwhelmed with claims. So-called ‘tax refund companies’ are persuading taxpayers into submitting refund claims for the tax deducted then keeping a large percentage of the refund.
If you receive a PPI settlement, you should declare the interest element and tax deduction on your self-assessment tax return relating to the year you received the money. Our team can help you amend your earlier tax return to declare any PPI interest and claim a tax refund, so please feel free to contact us.
For those not within the self-assessment system, you will need to claim your tax refund using the form R40. The quickest way to do this would be by signing in through the Government Gateway, but it can also be submitted via post. Under no circumstances should you let anyone else use your Government Gateway credentials to claim a tax refund on your behalf.