Martin Lewis says people that were unnecessarily taxed have 'last chance' to get money back

Martin Lewis says people that were unnecessarily taxed have 'last chance' to get money back Newspoint | 26/03/2025 16:39:14

Martin Lewis has sounded the alarm for those who may have had tax unnecessarily deducted from their Payment Protection Insurance (PPI) payouts, urging quick action as the financial year-end approaches. The MoneySavingExpert founder highlighted the urgency on MSE X page, saying: "Most people had tax taken off unnecessarily and it's your last chance to claim it back!".

Despite billions being repaid in PPI compensation, many individuals have been caught off guard by tax deductions they didn't owe. Martin insists that while tax is often automatically withheld from these repayments, not everyone is indeed obligated to pay, providing a silver lining – the option to claim back this unwarranted tax.

However, there is a limitation; refunds can only be sought for the past four fiscal years. As such, with April 6 marking the onset of a new tax year, time is running out for those looking to recover taxes from the year 2020/2021.

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On his popular , Martin issued a stark reminder of the looming deadline: "The deadline to make a tax reclaim for the 2020/21 tax year is 5 April 2025 (it's fast approaching) – so urgently make a tax reclaim if your original PPI payout was paid between 6 April 2020 and 5 April 2021."

He also emphasised that this is not a trivial matter for some, as the tax deducted from your payments could amount to over £1,000 if you received a substantial payout. If you were a non-taxpayer in the year the PPI was paid out, and the statutory interest didn't push you into the taxpaying bracket, you might be eligible to reclaim every penny of tax paid on your payout.

The process of claiming back the tax is relatively straightforward, beginning with the 'Claim a refund of income tax deducted from savings and investments' forms R40 for UK residents or R43 for those residing overseas. These can be completed online, with additional guidance available on each section on the.

If you had multiple PPI payouts in different tax years, you'll need to complete a separate form for each payout. Martin suggested that if the form is proving challenging, include a cover letter to HMRC detailing your address, national insurance number and explaining why you believe you were not liable for the tax deducted from your payout.