Reclaim on PPI Tax led to HMRC saying I owe them money! 8 April 2020 at 5:35PM in Reclaim PPI & other insurance 9 replies 202 views

Shelana101

As advised by Martin Lewis, I filled in the form R40 to reclaim tax paid on the interest on a PPI payout that I received in 2017. I have just had a letter from HMRC saying that I now owe them more tax for the year, a total of £587.29! Martin should have made it clear that if you are on a higher income paying 40% tax then rather than a refund of the tax it would lead to a demand for additional tax. Has this happened to anyone else?

societys_child

Has this happened to anyone else?

I hope so if they were trying to claim tax back that they're not entitled to!

You should have declared it to HRMC, not try to claim extra.

If you've had the refund, pay what you owe.

[Deleted User]

Shelana101 said:Martin should have made it clear that if you are on a higher income paying 40% tax then rather than a refund of the tax it would lead to a demand for additional tax. 

Regardless of "advice" from Martin Lewis, you surely knew already that you were in a higher tax bracket? 

Asking for a refund in that circumstance was solely down to you, I'm afraid. 

societys_child

Shelana101 said:

As advised by Martin Lewis . . .

I don't think Martin Lewis is a tax advisor

Dazed_and_C0nfused

Shelana101 said:

As advised by Martin Lewis, I filled in the form R40 to reclaim tax paid on the interest on a PPI payout that I received in 2017. I have just had a letter from HMRC saying that I now owe them more tax for the year, a total of £587.29! Martin should have made it clear that if you are on a higher income paying 40% tax then rather than a refund of the tax it would lead to a demand for additional tax. Has this happened to anyone else?

Loads of people I would think.

But some higher rate payers could be due a refund of some of the tax deducted.  It all depends on the exact figures for each person.  Owing extra is probably more likely but some will be due a refund.

walton421

Can Anyone help me , this is what I received off HMRC
I have looked at the previous R40 submitted there is no mention of ppi income on the form 
However on a recent letter you have confirmed that you received £7314 in the tax year 2017-2018
To enable me to review your claim hmrc require 
the amount of compensatory interest at 8% and tax deducted from that interest at 20%.
how do I work that out,

many thanks 

[Deleted User]

walton421 said: hmrc require 

the amount of compensatory interest at 8% and tax deducted from that interest at 20%.
how do I work that out,

You can either look at the redress letter you originally received from the Bank or you can ask the Bank to re-advise you of the necessary breakdown. 

Clearly you haven't filled out the R40 correctly and have only detailed the total redress you received rather than the interest on which you will have been taxed. 

walton421

Thanks for the information

Dazed_and_C0nfused

walton421 said:

Can Anyone help me , this is what I received off HMRC
I have looked at the previous R40 submitted there is no mention of ppi income on the form 
However on a recent letter you have confirmed that you received £7314 in the tax year 2017-2018
To enable me to review your claim hmrc require 
the amount of compensatory interest at 8% and tax deducted from that interest at 20%.
how do I work that out,

many thanks 

The PPI refund itself isn't taxable and does not have may tax deducted from it.  

You need to notify HMRC of the taxable element (the statutory interest) and tax deducted.

dunstonh

Martin should have made it clear that if you are on a higher income paying 40% tax then rather than a refund of the tax it would lead to a demand for additional tax.

Martin is not responsible for you trying to commit tax fraud (which is effectively what you were doing).  HMRC would have found out in time as the interest is declared to HMRC by the banks.  So, about two years later you would have had the bill plus penalty interest.

 Has this happened to anyone else?

Yes.