UK households face £6,139 payouts with millions urged to come forward and “reclaim”. Households could be owed £1,100 in mis-sold car finance, as well as £252 marriage allowance frm HMRC, a PPI scandal payout worth £3,000, PPI tax worth hundreds and overpaid tax woeth £1,562, as well as work expenses costing £125.
Thousands of savers could be at risk of losing out on retirement cash due to a pension failure, too. The first of the six ways to reclaim cash is if you bought a car, van or motorbike on PCP or Hire Purchase (not leasing) before 28 January 2021.
In January 2024, the regulator, the Financial Conduct Authority (FCA), launched a major investigation into hidden, unfair car finance commission. This could lead to billions of pounds of overcharged interest paid back to millions of people.
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Car finance scandal – £1,100
The Financial Conduct Authority (FCA) launched a major investigation in January looking into hidden, unfair car finance commission. Essentially, drivers who used finance deals to purchase their cars between the years of 2007 and 2021 could be in line for an average payday of £1,100.
The FCA is currently investigating a practice called Discretionary Commission Arrangements (DCA) which saw lenders allow those who arranged car loans – including car dealers – to adjust their customers’ interest rates. This meant that the higher the interest rate given to a customer, the more commission whoever was arranging the loan would receive – something that was banned in 2021.
PPI payout – £3,000
Law firm Harcus Parker is attempting to launch a group claim against banks for £18billion in secret commissions taken from PPI customers. If successful, claimants could get an average £3,000 back.
PPI is a kind of insurance contract that can be taken out with a loan, credit card, mortgage or other financing (such as catalogue or store accounts, or car financing). It was supposed to provide protection to individuals to ensure that credit repayments could be met if they were not able to work, due to illness or redundancy.
Tax on PPI
If you have already had a PPI payout, you could still be owed hundreds. PPI pay-outs are made up of:
- the compensation (which is the refund of the PPI premiums paid and the interest you have paid on those premiums), and
- the statutory interest on the compensation, at 8% (paid in recognition that you were deprived of your money for some time).
It is only the second element, the statutory interest, which is taxable (in the tax year that you receive it). Your circumstances in the tax year(s) in which you paid the original premiums are not relevant.
Although the statutory interest element is treated for tax purposes as savings income, it is not paid gross like bank interest. Most of the time, basic rate tax is deducted at source on the interest element of a PPI pay-out before it is paid to you. The tax is then passed to HMRC on your behalf.
Tax overpayments – £2,562
At the end of each tax year, HMRC should send you a P800 notice showing if you are owed a refund. According to data from Rift Refunds, the average payout in 2023 was £1,562.
Marriage Allowance – £252
Couples could save up to £252 a year on tax with the Marriage Allowance. You can use an online tool called the Marriage Allowance Calculator to see if you are eligible which HMRC has previously said takes “only 30 seconds”.
You can apply online through the HMRC website or by calling 0300 200 3300. You’ll need your National Insurance number and ID to hand. Once you’ve put in the claim, it’ll count for tax years going forward as long as you still meet the eligibility criteria.
The personal allowance currently sits at £12,570 – so if you earn below this, you do not pay any tax, and if you earn above, then you pay tax on your income over this level. For example, if you earn £12,600 – then you will only pay tax on £30.
Work expenses – £125
The most recent figures show that more than 800,000 taxpayers claimed tax refunds for work expenses during the 2021-22 tax year with an average claim of £125. A claim can be made online by using HMRC’s online portal at GOV.UK.
A claim for valid purchases can be made against receipts or as a ‘flat rate deduction’. The flat rate deductions are set amounts that HMRC has agreed are typically spent each year by employees in different occupations. These deductions range from £60 to £1,022. If an occupation isn’t listed, employees can still claim a standard annual amount of £60 in tax relief if they pay their own expenses.