PPI R40 claim for higher rate earner - will I owe tax to HMRC?

Chenzo

Hi All,

I'm looking at whether I can claim any tax back on my PPI payout with the R40 form, but worried I might end up owing HMRC.

I received two PPI payouts in the 2019/20 tax year which totalled £12,902.83 (less the fees) and had a total interest element of £8,513.60. The lenders withheld £1,702.72 in tax at 20%.

I also learnt gross interest of £25.34 from savings, so total gross interest for the year was £8,538.94.

I was a higher rate earner during the 2019/20 tax year, so can I claim anything back, or if I submit the R40, could I end up owing HMRC? I think I should have paid tax of £3,215.58, instead of £1,702.72, so could owe the difference to HMRC???

Please help as I am going round in circles with this!

Dazed_and_C0nfused

From what you've posted the interest of £8,538 would be taxed like this,

£500 x 0% = £0.00
£8,038 x 40% = £3,215.20

That's assuming HICBC or tapered Personal Allowances aren't factors.