Documents you need for a car finance tax rebate

To reclaim the tax taken from car finance compensation, the most important document is the letter or statement your lender sends when it pays you. It should show the gross interest, the tax deducted and the net interest. HMRC asks for exactly that on an R40 claim (GOV.UK). Beyond that, you mainly need to know your income for the tax year you were paid.

Update, 3 October 2026: Since this article was first published, the FCA has confirmed its motor finance compensation scheme, and the Upper Tribunal suspended parts of it on 2 July 2026. Lenders don’t currently have to calculate or pay compensation under the scheme. The FCA expects payments to begin in 2027 if the scheme is upheld (FCA). Payout letters under the scheme won’t arrive until then, so keep this checklist for when they do.

The lender’s payout letter

When a lender pays compensation, it usually adds interest for the time you were out of pocket. The lender deducts basic-rate income tax (22% from 6 April 2027) from that interest before paying. The compensation itself isn’t taxed as income, so only the interest matters for a tax rebate. Our overview of whether car finance compensation is taxable explains why.

Check the letter shows:

• the gross interest (before tax)
• the income tax deducted
• the net interest paid to you
• the date of payment
• the agreement or account reference

Some letters show a single total. If yours doesn’t split out the tax, write to the lender and ask for a statement. When tax has been deducted from a payment like this, the payer must, on written request, give you a statement of the gross amount, the tax deducted and the net amount paid (Income Tax Act 2007, s975).

If you had more than one agreement, you may get a separate letter for each. Keep them all. Our guide on multiple PCP and HP claims explains how they add up.

The tax year

Interest is generally taxed in the tax year it is paid to you. UK tax years run from 6 April to 5 April. Note the date on your payout letter, because it decides which year the claim is for.

Claims can be made for the current tax year and the previous four (GOV.UK). Each year needs its own claim.

Your income for that year

Whether you get tax back, and how much, depends on your other income and allowances. An R40 claim takes account of employment, pension and benefit income, so these help:

• your P60 or P45 for the year
• pension statements, if you’re retired
• details of any taxable benefits
• interest statements from banks and building societies

Other savings interest counts because it uses up the same allowances. The Personal Savings Allowance is £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers and £0 for additional-rate taxpayers. If your other income is low, the starting rate for savings can make up to £5,000 of interest tax-free (GOV.UK).

You don’t usually need to send all of this to HMRC. It’s what shows whether anything is owed, and it’s what we use to work out your position and prepare the claim. Our non-taxpayer and higher-rate taxpayer guides explain how the bands work.

If the payout was to someone else

If you’re dealing with a payout made to a relative, you’ll need their lender’s letter and details of their income for the year, as well as authority to act for them. If the payout relates to someone who has died, our guide explains how the rules differ, including when there is usually no tax to reclaim.

If you’ve lost your car finance paperwork

You don’t need your original finance agreement for the tax rebate. It can still help with the compensation side, for example to confirm the lender and the dates.

• Agreements still running: under the Consumer Credit Act, you can ask the lender in writing for a copy of your fixed-sum credit agreement, for a £1 fee (CCA 1974, s77). This right doesn’t apply once nothing more is owed.
• Agreements that have ended: you can make a subject access request for the personal data the lender holds about you. It is free, and organisations usually have one month to respond (ICO).

Not sure who the lender was? Old bank statements showing monthly payments, the dealer’s name, and the car’s make and registration can help. Our guide on how to find your car finance lender walks through it.

Your next step

Once you have your payout letter, use our calculator to estimate what you could get back. Our how it works page explains how we check your position, prepare and submit the R40 as your agent and deal with HMRC for you.