Reclaim on PPI Tax led to HMRC saying I owe them money!
in Reclaim PPI & other insurance
9 replies 202 views
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?
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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.
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,
You need to notify HMRC of the taxable element (the statutory interest) and tax deducted.
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.