PPI : R40 Form : Now underpaid tax

CUSTARDBUBBLE

I had a number of successful PPI claims made last year and heard that you could claim back tax using the R40 form. I filled in the figures and sent to good ole HMRC. A week later I got a letter stating that I now owe them £2600.
One thing to be aware of is, if the Interest paid to you plus your salary, puts you into a higher tax bracket, you have to pay 40% tax on the part that's over £46,351. The banks had already deducted the 20% tax automatically from the interest, but it was the part that went into the 40% tax bracket that I have been stung for. They did this on the back of me filling in the R40 form, so not sure how long it would have been before they finally caught up with me.

brettcta

They would have likely got you after April 2020.

Pay up and move on.

BoGoF

Two things happen with regards interest received if a higher rate taxpayer

1) The 0% rate band (aka personal savings allowance) reduces to £500 (£1000 for basic rate taxpayers)

2) Anything in excess of the £500 is liable at 40%, as you say an additional 20%.