PPI Tax reclaim - risk?

steveinkent

Hi
I had two PPI payouts, one in 2017 and one in 2019. In 2017 £431 was deducted from the gross interest paid, and in 2019 £1382 tax was deducted from the gross interest paid. My question is whether it's risky to seek a repayment of some of this through an R40, or if it might actually increase my tax liability for those years?
Many thanks
S

Dazed_and_C0nfused

It might do yes.

Roughly how much was your total taxable income in each of the tax years concerned (whichever they actually were).

steveinkent

Total taxable income was £47k / £50k for those years.

Dazed_and_C0nfused

For the first year you are on the edge of being higher rate so it might depend on what other savings income you had in those tax year.

For the second year you will likely be liable to pay some 40% tax on the interest.

If you had no other interest then the income in 2016:17 or 2017:18 would be taxed,
£500 x 0% = £0.00
£1,655 x 40% = £662
Total tax due £662 less £431 deducted = £231 to pay.

But if you had some basic rate band available then some of the £1,655 might be taxed at 20% meaning you could have paid too much.

You really need to look in detail at your income for the year to know if you will be due a refund or have a bill to pay.