Tax Rebate on
Close Brothers
Finance Compensation
Received a Close Brothers motor finance compensation payout? HMRC almost certainly deducted tax before it reached you — and you may be able to get it back from HMRC.
Check If You Can Claim
What Is a Car Finance Tax Rebate — and Why Might You Be Owed One?
In practice, when a bank or lender pays out financial compensation, HMRC requires them to deduct income tax at the basic rate — currently 20% — from the statutory interest element of the settlement before any money reaches the customer. Consequently, this applies automatically to every Close Brothers car finance compensation payment made under the FCA's redress scheme.
Typically, most people receive their Close Brothers payout, see the deduction noted on their paperwork, and assume that is simply how things work. In many cases, it is not. However, if you were a basic rate taxpayer or a non-taxpayer in the year you received the compensation, that deducted tax may be reclaimable in full — directly from HMRC, and without you needing to contact HMRC yourself at any point.
Importantly, this is completely separate from your original Close Brothers compensation claim and does not affect it in any way. Specifically, the mechanism is an HMRC R40 repayment form, which our HMRC-registered agents prepare and submit on your behalf.
Specifically, statutory interest is the interest portion of your compensation — added to reflect the time-value of money withheld from you. As such, HMRC treats this as taxable income and requires the lender to deduct 20% before it reaches you. Specifically, this is the element that may be reclaimable.
Estimate Your Close Brothers Tax Rebate
How Much Could You Be Owed?
Based on typical FCA payout ratios. Actual figures depend on the statutory interest shown in your Final Response Letter.
How to Claim Your Tax Back From HMRC
Your rebate is recovered via an HMRC R40 repayment form. Moreover, we handle everything — you don't need to contact HMRC at any stage.
Check Eligibility
First, complete our short online form. In fact, this takes under two minutes and immediately confirms whether you qualify to make a claim.
Share Your Details
Next, provide your personal information and a copy of your Close Brothers Final Response Letter showing the compensation and tax deducted.
We Handle Everything
We then prepare your HMRC R40 application, compile all supporting documentation, and submit your claim — no action required from you.
Receive Your Rebate
Finally, HMRC pays your rebate directly to you, typically within 6–8 weeks of submission. Overall, no win, no fee — our 39% + VAT applies only on recovery.
About Close Brothers & the FCA Compensation Scheme
By way of background, Close Brothers is the UK's largest motor finance lender, part of Close Brothers Group. For many years, Close Brothers arranged car finance through franchised dealerships — many of which involved discretionary commission arrangements that customers were never properly told about. Additionally, the dealer received higher commission if the lender placed the customer on a higher interest rate, creating a clear and undisclosed conflict of interest.
As a result, the Financial Conduct Authority's review found this practice was widespread. As a result, Close Brothers Group set aside £1.95 billion to compensate affected Close Brothers customers, covering agreements entered into between 6 April 2007 and 1 November 2024.
Customers who received a compensation payout under the FCA scheme should be aware that the statutory interest element of their settlement attracted a 20% tax deduction at source. Where that deduction applies, you can therefore make a tax rebate claim directly to HMRC — entirely separately from the original Close Brothers compensation process.
Am I Eligible to Reclaim Tax on My Close Brothers Compensation?
In general, you may qualify if all three of the following apply to you:
Condition 1 / 3
You received compensation from Close Brothers — via the FCA's formal redress scheme, a standalone complaint, or a Financial Ombudsman Service decision.
Condition 2 / 3
Close Brothers deducted tax from your payout. This is confirmed in the Final Response Letter from Close Brothers, which sets out both the compensation amount and the tax deducted.
Condition 3 / 3
You were a basic rate taxpayer or non-taxpayer in the year the compensation was received. We Indeed, we confirm this as part of your free eligibility check — no guesswork required.
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
Common questions about the Close Brothers car finance tax rebate
Could You Be Owed Money Back From HMRC?
If Close Brothers deducted tax from your car finance compensation, the reclaim process is straightforward — and our HMRC-registered agents handle everything on your behalf.