I'm reasonably sure it should be just the fare, up to and including £35.00 the refund fee is counted against. Online tool does not include the taxes in this calculation.

Example:
Fare: £5.00; refund is £0.00 since less than refund fee.
Fare: £40.00; refund is £5.00 since refund fee - minus fare = -£5.00 (Refund due).

Be careful though calling; twice in a row I was given the run around by an agent that has lived under a rock the past two years. Apparently after a cancellation they must charge a £15.00 redeposit fee (Which for a cash booking is even more nonsensical).