How long does an HMRC tax refund take?

HMRC doesn’t publish a fixed processing time for R40 claims, the form used to reclaim tax taken off savings interest, including the interest in car finance compensation. Instead, it keeps an online tool showing when you can expect a reply, updated every week (GOV.UK). Its notes for the R40 say it will pay “as quickly as possible” and ask people to allow four weeks before getting in touch about a repayment (HMRC R40 notes).

What happens after a claim is sent

1. HMRC receives the R40 and the evidence of tax deducted, usually your lender’s letter or certificate.
2. It checks the claim against your income for that tax year.
3. It contacts you once the claim is processed, tells you whether you’re entitled to a refund and, if you are, how it will be paid (GOV.UK).

If you use an agent, the refund can be paid to the agent as your nominee, who then pays you the balance after their fee. HMRC requires agents to be registered and to have your signed authority, given within the six months before the claim is sent (GOV.UK).

Checking progress

HMRC’s Check when you can expect a reply tool shows the date it expects to have dealt with post sent on a given day. HMRC asks people not to chase before that date has passed. When we submit a claim for you, we track it and chase HMRC if the date passes.

What slows a claim down

Most delays come from claims HMRC has to query. The common causes are:

• No evidence of the tax deducted. HMRC needs proof of the tax the lender took off. Our guide to reading your compensation letter shows what to look for.
• The wrong tax year. Compensation counts in the tax year you were paid. Our guide to which tax year it counts in explains how to check.
• Figures that don’t match. The interest, tax and dates on the claim need to match the lender’s letter.
• Using the wrong route. R40 is for people who aren’t in Self Assessment and whose savings and investment income is £10,000 or less. If you file a tax return, the claim goes on the return instead (see our Self Assessment guide).

Interest on late refunds

HMRC may add repayment interest if a refund is paid late. For PAYE repayments, its manual says interest runs from 31 January after the end of the tax year until the refund is paid (HMRC PAYE91085). The rate is the Bank of England base rate minus 1%, with a minimum of 0.5% (GOV.UK).

When you can claim

You can claim once your compensation has been paid. Claims can be made for the current tax year and the previous four, with a separate claim for each year (GOV.UK). Most car finance scheme payouts aren’t expected until after the February 2027 court hearing; our scheme latest update tracks the timetable.

Getting it right first time

You can also claim from HMRC yourself. If you claim with us, we check your letter, confirm the tax year, prepare the claim with the right evidence and submit it as your agent, then follow it up until HMRC pays. Start with the rebate calculator, or read how it works.