MOST PEOPLE SHOULDN’T PAY TAX ON SAVINGS.

ON April 6, 2016 the personal savings allowance (PSA) launched, allowing basic 20% rate taxpayers to earn up to £1,000/year of savings interest tax-free – higher 40% rate taxpayers earn £500 and top 45% rate taxpayers don’t get anything. The statutory interest from PPI payouts counts within this personal savings allowance.

So if you had tax taken, and were a non-taxpayer or didn’t use your full personal savings allowance in the tax year you got your payout (it’s the date of the payout that triggers the tax), claim the tax back.

If the total interest earned from savings and PPI statutory interest is less than your personal savings allowance, you’re due all PPI tax paid back. Yet if the combined amount pushed you over the HMRC is ready to help with a claim threshold, you should only pay tax on the amount above it.

For example… How much you’re due back depends on the size of your PPI payout and when you took out the loan. As a rough example, if you received a £1,000 payout on a loan taken out five years ago, you could receive £60 tax back, or £100 if you took it out 10 years ago – but the amounts can be much larger, especially for non-taxpayers.

To reclaim the tax, fill in an online R40 form (form R43 if living overseas), which you can find at Gov.co.uk – you can post it back too if you need. It’s tricky to follow so I’ve put detailed help to fill it in, in my blog atmse.me/ppitaxback.

If you’re sttill struggling, call HMRC on 0300 200 3300 to discuss. Higher or additionalrate taxpayers will need to declare the statutory interest to HMRC to ensure they pay the correct tax.

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