Tax Rebate on
Hire Purchase
(HP) Compensation
Received a Hire Purchase car finance compensation payout? HMRC almost certainly deducted 20% tax before it reached you — and you may be able to get it back.
Check If You Can Claim
What Is a Hire Purchase Tax Rebate — and Why Might You Be Owed One?
Hire Purchase (HP) is one of the most widely used forms of car finance in the UK, and it is explicitly included within the FCA’s motor finance redress scheme — alongside PCP agreements. If your HP agreement was subject to a discretionary commission arrangement (DCA), your dealer secretly raised your interest rate to earn more commission without your knowledge. This practice was found to be unlawful and forms the basis of the FCA’s industry-wide compensation scheme.
When Hire Purchase compensation is paid and includes a statutory interest element, HMRC requires 20% income tax to be withheld before the money reaches you. This deduction applies automatically regardless of your personal tax position. If you were a basic-rate taxpayer or non-taxpayer in the payout year — or had unused Personal Savings Allowance — some or all of that 20% is reclaimable from HMRC.
Your HP tax rebate is entirely separate from your compensation claim. It is made directly with HMRC via an R40 repayment form and has no connection to your lender or the FCA process. Our HMRC-registered agents prepare and submit your R40 claim on your behalf — you never need to deal with HMRC, your lender, or the FCA directly.
The FCA’s motor finance redress scheme covers 12.1 million agreements nationally — including Hire Purchase. Statutory interest is calculated on the interest you overpaid due to the DCA, and HMRC treats it as savings income subject to 20% withholding. On a typical £1,000 HP payout, approximately £110 in tax may have been withheld — and for eligible claimants, this is fully reclaimable.
Estimate Your Hire Purchase Tax Rebate
How Much Could You Be Owed?
Estimate only. Actual figure depends on your specific payout breakdown and tax status.
How to Claim Your Hire Purchase Tax Back
We handle everything — you don’t need to contact HMRC, your lender, or the FCA at any stage.
Check Eligibility
Complete our short online form. We confirm whether your agreement, lender, and tax position qualify for an HMRC R40 rebate — no paperwork required at this stage.
Share Your Details
Provide your personal information and, if available, a copy of your settlement letter showing statutory interest and tax deducted. We tell you exactly what we need.
We Handle Everything
Our HMRC-registered agents prepare your R40 repayment form, file it with HMRC, and handle all correspondence. You don’t need to do anything else.
Receive Your Rebate
HMRC processes R40 claims within 6–8 weeks. Any repayment is passed directly to you. No win, no fee — our 39% + VAT applies only on a successful recovery.
Higher rate taxpayers may not be eligible. In some cases additional tax may be due instead — we assess this before any claim is submitted.
Frequently Asked Questions
Yes. The FCA’s redress scheme covers both PCP and HP agreements entered into between 6 April 2007 and 1 November 2024. HP borrowers affected by DCAs are entitled to the same compensation rights — and face the same 20% tax deduction on statutory interest — as PCP customers.
Yes, in most cases. The FCA scheme covers HP agreements going back to April 2007. For the HMRC tax rebate element, R40 claims can be made up to four tax years from the end of the year in which the payout was received.
Your settlement letter from the lender will show a breakdown of your compensation. Look for a line referencing “statutory interest” and a separate “tax deducted at source” figure. If tax was deducted, an R40 claim is almost certainly available.
There is no upfront cost. Our fee is 39% + VAT of any successful rebate — if HMRC does not repay anything, you pay nothing. We confirm our fee clearly before any claim is submitted.
HMRC typically processes R40 repayment forms within 6–8 weeks of receipt. Our agents handle all communication with HMRC and will update you when a decision is made.
Yes. You can register your interest now and our agents will file your R40 tax rebate claim in the correct tax year once your compensation is paid. The FCA expects most payouts to be issued during 2026.
Ready to Reclaim Your Hire Purchase Tax?
Check your eligibility in 60 seconds. Our HMRC-registered agents handle everything — no upfront cost, no HMRC contact needed.