Millions who took out car finance before 2021 could be due money back after a huge week of headlines. First came the Supreme Court’s long-awaited judgment on three big legal cases about hidden car finance commissions. Two of those cases, about if dealers had a special duty to act in your best interests, and whether hidden commission counted as a “bribe”, were shut down by the Court.
But in the third, judges ruled that one deal was “unfair” because more than half the cost of the loan went to commission, and customers weren’t told. This case was upheld, which leaves the door open for similar claims. For most, the bigger news is what happened immediately after.
Off the back of the third case, the regulator, the Financial Conduct Authority (FCA), confirmed plans to consult on a mass compensation scheme tackling Discretionary Commission Arrangements (DCAs).
That’s where dealers hike your interest rate to boost their commission. This was banned in January 2021, but between 2007 and the ban, it’s thought to have featured in around 40% to 50% of car finance deals.
If you took out hire purchase or personal contract purchase (PCP) car finance before January 28, 2021, and weren’t informed about the commission structure, you could be due money back.
The FCA expects most eligible people will get less than £950 per deal. This isn’t a windfall, but if you had more than one finance deal, you could claim for each.
Some deals, especially bigger loans or those with high commission, could see larger payouts. Not everyone will get it though. If you were on a 0% deal or your interest wasn’t increased, there may be no payout.
The redress scheme is being consulted on this autumn, with first payouts likely in 2026. It’s likely lenders will be made to contact you directly if you’re eligible.
You do not need to pay a claims company, as these could take a chunk of your refund. If you think you may have been affected, there are three things you can do.
If you haven’t already, put a complaint in to your lender now. You shouldn’t need paperwork for newer cases, but older claims will benefit if you have some details.
Secondly, skip claims firms. Wait for clear guidance from the FCA, as you may lose 30% or more in fees. Finally, if you have complained, sit tight.
Your claim is on record and should be handled under the new system. There’s no need to file again.
This process will take time, and much is still being hammered out. But if you used car finance before 2021, especially on a traditional loan or PCP, it’s well worth checking if you could be in line for a payout.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
DEAL OF THE WEEK
Lidl shoppers can bag a free bakery item worth up to 99p with any shop until Wednesday, August 20, 2025. Just scan the Lidl Plus app after making a purchase, and you’ll receive a digital coupon.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
If you’re self-employed or a landlord, the tax office is urging you to prepare now for a major change in how taxes are filed next year.
The Government is moving to phase out annual self-assessment tax returns in favour of quarterly digital updates, and the changes will take effect from April 2026.
The new rules, which form part of HMRC’s Making Tax Digital (MTD) programme, will first apply to those earning more than £50,000 a year from self-employment or property.
The overhaul aims to “modernise” the tax system, and will require affected taxpayers to keep digital records and report income and expenses every three months using HMRC-compatible software.
Around 780,000 people are expected to participate in this first wave, and the income threshold will be calculated based on total gross income, not profit.
Those with both property and self-employment income will need to keep separate records and file two sets of quarterly reports.
The scheme will expand in the years to come, with the annual threshold dropping to £30,000 in April 2027 and to £20,000 in 2028.
With a recent survey revealing that four in five do not feel ready, it’s important to get to grips with the new requirements and to start preparing immediately.
You can do this by taking on MTD-compatible software. Use the GOV. UK software finding tool (search this term on the website).
Also, consider joining HMRC’s voluntary testing programme. To do this, search “sign up for Making Tax Digital” on GOV.UK.
