How the tax is taken
- 1
Your lender pays you
Car finance compensation comes with interest added on top.
- 2
Tax comes off the interest
Lenders take basic-rate tax off that interest before they pay you: 20%, rising to 22% from 6 April 2027.
- 3
Most people never owed it
For most people the interest falls within their Personal Savings Allowance, so HMRC repays the tax.
Who can claim
You’re likely to get tax back if all three apply. PCPTaxRebates works out the right tax year and allowances, and claims from HMRC for you.
You’ve been paid, or are due, car finance compensation through the FCA scheme, a complaint or the Financial Ombudsman
Your compensation included interest with tax taken off
You earned under £50,270 in the tax year you were paid, or weren’t working
Good to know
Who does it
PCPTaxRebates is a trading style of Rebate Gateway Limited, an independent tax agent. It is a separate business from Justera and is not regulated by the FCA.
No rebate, no fee
Nothing to pay upfront. The fee comes out of the HMRC repayment: 39% + VAT (46.8% including VAT) of what HMRC repays, plus a £35 + VAT (£42) administration fee per claim, with a minimum total fee of £84 including VAT. If HMRC repays nothing, you pay nothing.
You can do it yourself
You can claim the tax back from HMRC yourself for free, on form R40 or through Self Assessment.
When
Once your compensation has been paid. Payouts under the FCA scheme are on hold until the legal challenge is decided. Where the scheme stands.
Questions
Is car finance compensation taxable?
The refund of what you overpaid isn’t taxed. The interest added to it is treated as savings income, and lenders take basic-rate tax off it before paying you.
Why can I get the tax back?
Most people have a Personal Savings Allowance: £1,000 of savings income tax-free for basic-rate taxpayers and £500 for higher-rate taxpayers. Some also get the starting rate for savings, up to £5,000 more. If the interest falls within these, the tax shouldn’t have been taken.
I haven’t been paid yet. Can I still claim?
The tax can only be reclaimed once your compensation has been paid. Payouts under the FCA scheme are on hold until the legal challenge is decided. Keep the letter your lender sends with your payment: it shows the interest and the tax taken off.
Do I have to use a tax agent?
No. You can claim the tax back from HMRC yourself, for free, on form R40 or through Self Assessment if you file a tax return.