How do I pay (not reclaim) the tax?

Gonna-be-debt-free
Gonna-be-debt-free Posts: 240 Forumite
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in Reclaim PPI & other insurance
As a top rate tax payer I am going to need to pay additional tax on my PPI reclaim. Do I just declare the statutory interest as income on my tax return? I am assuming it goes in Box 1 as would any other interest. Where would I enter the tax already paid (the 20% deducted at source)?

As OH is a zero rate tax payer, I assume he needs to fill in an R40 form to reclaim the tax deducted from his PPI refund.

I also assume there is no way to combine the two to take advantage of OH's unused tax allowances (but happy to be told otherwise!).

Comments

  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
    Yes, it is just part of your taxable income.

    It does go in box 1. You don't declare the tax deducted. HMRC will use the figure in box 1 to calculate the gross income and tax paid.

    If other half hasn't been asked to file a Self Assessment return for the year in question then yes, an R40 would be the correct form.

    You might be able to have some of your other half's allowances. Are you married? And if so how old are they and if not 80+ how old are you?
  • Gonna-be-debt-free
    Gonna-be-debt-free Posts: 240 Forumite
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    Thank you! :)

    Silly question - If I don't tell HMRC about the tax already deducted, how will they know? (Or is that already assumed because all banks do that with interest payments?).

    Yes, OH and I are married. He is 47, I am 46.
  • [Deleted User]
    [Deleted User] Posts: 26,612 Forumite
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    Gonna-be-debt-free wrote: »
    If I don't tell HMRC about the tax already deducted, how will they know?
    The Bank have paid the tax on YOUR behalf from YOUR redress.

    If you don't fill in the tax return correctly and honestly I shouldn't have to tell you the consequence.
    https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/271776/HMRC_issue_briefing_-_tackling_tax_evasion.pdf
  • Gonna-be-debt-free
    Gonna-be-debt-free Posts: 240 Forumite
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    :rotfl::rotfl::rotfl:
    No, that's not what I meant at all :rotfl:
    20% tax has already been deducted. My question was, if I have no way to tell them that the 20% has already been deducted, what is to stop them deducting a full 46% from the interest payment, rather than just the remaining 26% that is due.
  • BoGoF
    BoGoF Posts: 7,099 Forumite
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    Because by entering it in the box you have been advised you are telling them it has already been taxed. There is a seperate box for untaxed interest.

    I assume the 46% and 26% you refer to should be 40 and 20?
  • Gonna-be-debt-free
    Gonna-be-debt-free Posts: 240 Forumite
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    BoGoF wrote: »
    Because by entering it in the box you have been advised you are telling them it has already been taxed. There is a seperate box for untaxed interest.

    I assume the 46% and 26% you refer to should be 40 and 20?

    Ah! Thank you :) I couldn't access an actual form to check.

    46% = top rate income tax for Scotland. I have already been taxed at 20% at source, so still 26% to pay (but I didn't want to accidentally pay an extra 46% on top of the 20% already taxed at source). Now I just need to remember about it for a year to put it in the return.

    Thanks so much for your help all :beer:
  • BoGoF
    BoGoF Posts: 7,099 Forumite
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    Top rate.......lucky you.

    Hopefully you are maximising pension contributions to mitigate.
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
    46% = top rate income tax for Scotland. I have already been taxed at 20% at source, so still 26% to pay (but I didn't want to accidentally pay an extra 46% on top of the 20% already taxed at source). Now I just need to remember about it for a year to put it in the return.

    You have misunderstood how tax works for Scottish residents.

    The Scottish government has no powers over the taxation of interest (or dividends) so the tax rates on interest is the same in Scotland as it is for the rest of the UK.

    So only 45% in total, not 46% :p
  • Gonna-be-debt-free
    Gonna-be-debt-free Posts: 240 Forumite
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    BoGoF wrote: »
    Top rate.......lucky you.

    Hopefully you are maximising pension contributions to mitigate.

    Honestly, I have no idea :rotfl: I am good at earning it, not so good (but not awful) at looking after it. I pay a fair wack into pensions, but there is no real strategy. I am signed up to see a financial adviser that my company pays for, but it's face to face in London and I never seem to have time when I'm in London. (And I am now taking this way off topic for this forum).
    Dazed_and_confused wrote: »
    You have misunderstood how tax works for Scottish residents.

    The Scottish government has no powers over the taxation of interest (or dividends) so the tax rates on interest is the same in Scotland as it is for the rest of the UK.

    So only 45% in total, not 46% :p

    Ah! :D All the better. Although I absolutely do not begrudge paying the extra 1%.
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