You’ve had a PPI or compensation payout, and the letter says tax was taken off the interest. Or you receive a small annuity that always arrives with 20% missing. If your income is modest, you may not owe that tax at all. The R40 form is HMRC’s route for getting it back when you don’t file a tax return. This guide covers who can use it, what you’ll need, three worked refund examples and the time limits.
- Banks and building societies have paid interest without deducting tax since April 2016, so most savers never need an R40.
- Tax is still often deducted from interest added to PPI and other refunds, and from purchased life annuities.
- You can’t use R40 if you’re registered for Self Assessment. Claim on your tax return instead.
- In 2026/27, up to £5,000 of savings income can be taxed at 0%, plus a Personal Savings Allowance of £1,000 or £500.
- Claims for 2022/23 must reach HMRC by 5 April 2027.
What Is the R40 Form?
The R40 form is a repayment claim. You list all your taxable income for one tax year, including the gross amount of any taxed savings or investment income and the tax taken off it. HMRC then works out what you should have paid and refunds the difference. GOV.UK calls the process claiming a refund of tax on savings and investments. Most people now make the claim online rather than posting the paper form.
It’s mainly used by non-taxpayers, pensioners and basic-rate taxpayers whose savings income sits within their allowances but has still had tax deducted. Typical claimants include:
- Retired people who received a PPI or mis-sold product refund with interest
- Students or people out of work who had tax taken off compensation interest
- People with a small purchased annuity alongside the State Pension
- Beneficiaries of a trust or estate whose R185 shows tax already paid
Why most savers don’t need it any more
Before April 2016, banks took 20% off most interest, and lower earners had to reclaim it or fill in form R85 to receive it gross. Since then, ordinary bank and building society interest has been paid in full. That makes R40 a narrower tool than many older guides suggest. Today it mainly covers the types of income in the next section.
Which Income Still Has Tax Taken Off?
| Income | Why tax is deducted | Where you’ll find the figures |
|---|---|---|
| The 8% simple interest added to PPI compensation, and interest included in some other refunds or compensation payments | The payer takes basic-rate tax off the interest part | The final response letter or a tax deduction certificate |
| Purchased life annuities | Only the taxable income element is paid after tax. Part of each payment may be a tax-free capital element | The annuity provider’s annual certificate |
| Trust or estate income | Trustees or personal representatives pay tax first | Form R185 from the trustee or executor |
| Other qualifying savings or investment income, within the R40 limits | Depends on the product | The payer’s statement |
Not every compensation payment includes interest at 8%. Look at the payer’s breakdown to see which part is the taxable interest. With PPI, the premiums you get back, and any historic interest that simply returns money you paid, aren’t normally taxable. The separate 8% compensatory interest is what counts as savings income.
Any foreign income has to be included on the claim where it applies. To use R40 at all, foreign dividends must stay within that year’s dividend allowance.
Can You Use the R40 Form? The Eligibility Checklist
According to HMRC’s guidance, you can claim with R40 if all of these apply for the year:
- Your gross savings and investment income is £10,000 or less
- Your gross income from land and property is £10,000 or less, and the net figure is £2,500 or less
- Any foreign dividends are within the dividend allowance
- You’re not registered for Self Assessment
- You live in the UK. Non-residents use a different form
- Registered for Self Assessment? Put the savings income on your return and the refund is worked out there. See Self Assessment tax returns.
- Only PAYE income and HMRC has already reviewed your year? Any refund usually comes through a P800 calculation. This P800 tax refund guide explains how.
- Taxed savings or annuity income, and not in Self Assessment? Use R40.
Quick self-check: is a claim worth making?
| Line | Question | Your answer |
|---|---|---|
| A | Total non-savings income for the year (pay, pensions, benefits) | £ |
| B | Unused Personal Allowance: £12,570 minus A (enter 0 if A is £12,570 or more) | £ |
| C | Non-savings income above the allowance: A minus £12,570 (enter 0 if below zero) | £ |
| D | Starting-rate band left: £5,000 minus C (enter 0 if below zero) | £ |
| E | Your Personal Savings Allowance (£1,000 basic / £500 higher / £0 additional) | £ |
| F | Gross taxed savings income received | £ |
Add lines B, D and E together. If line F is no more than that total, there should normally be no Income Tax due on the savings income, so the tax taken off is usually refundable. Your exact result still depends on your full income and tax position for the year.
How Much Savings Income Is Tax-Free in 2026/27?
Three allowances work in order, and together they explain why many people get all their tax back:
| Layer | 2026/27 amount | How it works |
|---|---|---|
| Personal Allowance | £12,570 | Covers any income first, including savings if your other income is low |
| Starting rate for savings | Up to £5,000 at 0% | Reduced £1 for every £1 of non-savings income above £12,570 |
| Personal Savings Allowance | £1,000 basic rate · £500 higher rate · £0 additional rate | Taxed at 0% on top of the starting rate |
These figures come from the Budget 2026 rates annex. The Budget also announced that tax rates on savings income will rise to 24%, 44% and 49% from 6 April 2027. The allowances above still apply first, but any tax deducted on future interest may be at different rates.
Scotland, Wales and joint accounts
Scottish taxpayers pay the same UK rates on savings income as everyone else. Their wages and pensions, though, are taxed at Scottish rates, and that can change which Personal Savings Allowance applies, so check your overall band before relying on the £1,000 figure. Where interest belongs to two people, such as a joint account or a joint PPI claim, each person normally includes only their own share. Usually that’s half each. Each of you makes a separate claim, if you need one.
R40 Form Worked Examples (2026/27)
These examples are illustrative, use rest-of-UK rates and assume no other income. Each one shows how the allowances decide the refund.
| Step | Figure |
|---|---|
| Pension income | £14,000 |
| Non-savings income above £12,570 | £1,430 |
| Starting-rate band left (£5,000 − £1,430) | £3,570 |
| PPI interest received (gross) | £600, with £120 tax deducted |
| Tax due on the interest | £0, as it’s all within the starting-rate band |
| Refund | £120 |
Tax correctly taken from the pension itself is a separate matter. The £120 here is only the tax deducted from the PPI interest.
Aisha earns £30,000, so her starting-rate band is used up by her salary. She received £800 of statutory interest with £160 tax taken off. Her £1,000 Personal Savings Allowance covers all £800, so no tax is due on it. Refund: £160.
Ben earns £60,000 and received £900 of interest with £180 deducted. As a higher-rate taxpayer, his Personal Savings Allowance is £500. The other £400 is taxed at 40%, which is £160. He paid £180, so his refund is £20. A small refund like this may still be worth claiming, as the online process is short.
In each case, the claim covers the whole year’s income, not just the interest. That’s how HMRC applies the allowances correctly.
When a claim won’t help
An R40 isn’t always worth it. Additional-rate taxpayers have no Personal Savings Allowance. If 20% was taken from interest that’s taxable at 45%, more tax is normally owed, so a claim won’t produce a refund. Higher-rate taxpayers only gain on interest up to £500. Anyone with income of £100,000 or more, or with untaxed income such as rent above the limits, usually needs a Self Assessment return instead. In those cases, the right move is to report the income, not to claim.
What You Need Before You Claim
- The payer’s statement showing the gross interest, tax taken off and net amount (for PPI, usually the final response letter or a separate tax certificate)
- Form R185 for any trust or estate income
- Annuity certificates for the tax year
- Your P60 or pension statements for other income in the same year
- Your National Insurance number and the bank details for the refund
If a lender didn’t show the tax figures, ask it for a certificate of tax deducted before you claim. HMRC may ask to see it.
Carol’s PPI refund in June 2026 included £1,300 of interest built up over ten years. For tax purposes, all £1,300 counts as savings income in 2026/27, the year she received it, not spread back over the ten years. If her other income is low, the starting rate and her Personal Savings Allowance could still cover most or all of it. She would claim for 2026/27 only.
What Happens After You Send an R40 Claim?
HMRC checks the figures against what payers have reported. It may write to you for the tax certificate. If everything matches, the refund is paid to the bank account you gave, or by cheque if you didn’t give one. If the calculation shows you actually owe tax, for example because other income was higher than you thought, HMRC may collect it through your tax code or send a bill. That’s why it matters to enter every source of income correctly.
How to Claim With the R40 Form: Step by Step
- Check you’re eligible using the checklist above.
- Start the claim online from GOV.UK’s refund page. Each tax year is a separate claim.
- Enter all your income for that year: employment, pensions, benefits and savings. Don’t enter only the taxed interest.
- Send evidence if asked. GOV.UK tells you where to post the payer’s certificate.
- Track your claim with HMRC’s when to expect a reply tool. The R40 notes ask you to allow four weeks before chasing a repayment.
Claiming for someone else
If you’re claiming for a relative, or as their agent, you’ll need the postal version of the claim. Start online and GOV.UK will direct you to the right form. You’ll also need authority to act for them.
Claiming for someone who has died
If tax was taken off savings income received by someone who has since died, the executor or administrator can usually claim it back as part of settling their tax for the year of death. Start with Tell Us Once, then follow HMRC’s guidance on tax after someone dies. Don’t include their income on your own claim.
R40 Time Limits
| Tax year | Claim by |
|---|---|
| 2026/27 | Once the year’s income is known (current year) |
| 2025/26 | 5 April 2030 |
| 2024/25 | 5 April 2029 |
| 2023/24 | 5 April 2028 |
| 2022/23 | 5 April 2027 |
Anything older than four years can’t be reclaimed, so deal with older PPI payouts first. Keep a copy of each claim, the payer’s certificate and HMRC’s reply for at least the same four years, in case a figure is queried later.
Common Mistakes With R40 Claims
| Mistake | Why it matters |
|---|---|
| Using R40 while registered for Self Assessment | HMRC will reject it, and the refund should go through your return |
| Entering only the taxed interest | HMRC needs your full income to apply allowances correctly |
| Putting several years on one claim | Each tax year needs its own claim |
| Treating the whole PPI payout as income | Only the 8% compensatory interest is taxable; the premiums returned usually aren’t |
| Missing the four-year limit | Older years are lost for good |
| Claiming without the tax figures | You may be asked for proof and the claim slows down |
R40 vs R85: What’s the Difference?
They’re easy to mix up. R85 was used to ask a bank to pay interest without taking tax off. R40 claims back tax that has already been taken. Since banks stopped deducting tax in April 2016, R85 is rarely needed for ordinary accounts, and R40 remains the tool for the few types of income that are still taxed at source.
R40 Form FAQs
What is an R40 form used for?
It’s used to claim back tax deducted from savings and investment income, such as PPI interest or annuity payments, by people who don’t file a Self Assessment return.
Can I claim tax back on PPI interest with R40?
Yes. If tax was taken off the interest part of a PPI or similar refund and your allowances cover that interest, R40 is the usual way to reclaim it.
How long does an R40 refund take?
HMRC doesn’t promise a fixed time, but its notes ask you to allow four weeks before chasing. Use HMRC’s online tool to see current reply times.
Can I fill in the R40 form online?
Yes, for your own claim. Claims made on behalf of someone else usually go by post.
How far back can I claim with R40?
For the current tax year and the previous four. A 2022/23 claim must reach HMRC by 5 April 2027.
Do I need to send an R40 every year?
Only for years when tax was taken off income you don’t owe tax on. Each year is a separate claim.
Is the PPI refund itself taxable?
Usually not. Returned premiums, and historic interest that simply refunds what you paid, aren’t normally taxable. The separate 8% compensatory interest is taxable savings income.
Does an R40 claim affect my tax code?
Usually not. If the claim shows you owe tax instead, HMRC may collect it through your tax code or send you a bill.
What is the R40M?
R40M is HMRC’s set of notes that explains each box on the paper form.
Can I use R40 if I’m in Self Assessment?
No. If you’re registered for Self Assessment, include the income and tax deducted on your tax return instead.
Final Verdict: When the R40 Form Is Worth Using
The R40 form matters most for people with modest incomes who’ve had tax taken off interest they never owed tax on. That usually means a PPI payout, compensation or an annuity. Check you’re outside Self Assessment, gather the payer’s tax figures and claim each year separately. Start with the oldest year still open, because 2022/23 claims close on 5 April 2027.
- Find any letters or certificates showing tax taken off interest or annuity payments.
- Check you’re not registered for Self Assessment.
- Start your claim on GOV.UK, one tax year at a time.
- Read our guide to adjusted net income if your savings push you near a threshold.
- Eligibility limits and time limits come from HMRC’s refund guidance (updated November 2025) and the R40 notes.
- Allowances and the 2027 rate change are checked against Budget 2026 material.
- All three refund examples were recalculated line by line.
- Last reviewed: November 2026.