Tax on Mortgage PPI Claim

antdon

Hi All

I have just recieved £5800 from a mortgage ppi claim...
WooHooo.....

But, Its probably going to now become complicated.....

£3300 of the £5800 may be taxable interest (halifax own words)

The £5800 payment was made automatically into a joint account in the names of both my ex-wife and myself. (fortunately still open but unused in 10 years)

The account was still open so I have moved the money into my account.

I was divorced 10 years ago and I was settled with the house etc etc.... as part of the divorce... (she feeling rightly guilty walked away with just half of the savings)

The mortgage ppi was in my name.
But was paid from the joint account.

So....... My Question

Will the inland revinue contact my ex-wife demanding tax on half of the £3300....
Or will they just demand the interest from me as the PPI holder?????

Or should I contact the inland revinue and offer to pay the outstanding tax myself???

Ummmn!!!! Just dont know.........

Oh! and how do they calculate the tax (surely its not income tax rates!)

DrSqueeze

Firstly, congratulations on your successful outcome! :beer:

If the PPI was only in your name, then the refund is also only in your name. The account it was paid into doesn't affect that. If they had sent you a cheque and you'd banked it through a joint account, that wouldn't change the fact that only your name was on the cheque.

Most Interest is taxable, and you should inform HMRC (either on your Self Assessment if you have one, or by contacting your tax office).

amersall

Congrats on your win :j:j:j

antdon

Many thanks for the reply.

I think my first call should be the halifax to make sure that the policy was in just my name....

The story gets even more complex....
I claimed miss selling because I was forced to take the policy with a 100% mortgage in the 80's....
But they have paid out, saying that when I changed the mortgage to buy my second home, they should have changed the policy so have repaid the payments paid after the change in mortgage
until I later changed my mortgage deal (approx 8 years)...

So potentially they may repay on the first 6 years of the mortgage and the last 10 years (both not apparently covered in their letter to me)

antdon

OK its just got a whole lot more complex..

I have just spoken to the halifax and they say that if they paid the money into a joint account then the policy must be in joint names.

I know this to be wrong as the ppi they paid out on, was on the first mortgage that I held with them, and the 1st mortgage was in my name only.

But now I have to proove it to them.....

If I contact the inland revinue will they just want the tax on the ppi claim payment, or will they contact my ex-wife to claim half off her????

Any help would be very gratefully recieved.....

dunstonh

I claimed miss selling because I was forced to take the policy with a 100% mortgage in the 80's....

One assumes you had another reason as well as that wouldn't be successful. Or more likely, they had no audit trail to support their position.

they say that if they paid the money into a joint account then the policy must be in joint names.

That's rubbish. Its the policy that matters as you rightly say.

However, tax is deducted from the redress payment before you get it. So, unless you are non rate taxpayer or higher rate taxpayer, dont worry about it.

magpiecottage

dunstonh wrote: »

However, tax is deducted from the redress payment before you get it. So, unless you are non rate taxpayer or higher rate taxpayer, dont worry about it.

If they deduct tax from the payment they should issue you with a certificate of the amount deducted.

Small intermediaries may not deduct tax or issue a certificate but should give an account of the interest paid.

antdon

magpiecottage wrote: »

If they deduct tax from the payment they should issue you with a certificate of the amount deducted.

Small intermediaries may not deduct tax or issue a certificate but should give an account of the interest paid.

The Halifax say "the interest portion of the refund may be deemed to be taxable income, and any tax due on this should be dealt with between you and your local tax office"

This seem pretty self explanitory.

I have had no contact with my ex-wife in 10 years, and dont want any.
But if I just leave it, I would assume the inland revinue would contact us both eventually.....
As far as I am aware she has no claim. The house contents etc etc were awarded to me in the divorce... (I hope this covers the ppi)

This ISNT an anti ex-wife thing. I am sure she would prefare no contact as well... And I am sure she wouldnt want to claim.....

I am hoping to get proof that the policy was in my name, and then get the Halifax to issue an new letter stating this.

I that fails I will check the details of the divorce settlement and try to persuade the revinue that the refund is mine

I knew this was never going to be straight forward....

Any other advise or help, would, as always, be very gratefully recieved....

antdon

If I leave things as they are, what are the chances that the inland revinue will contact my ex-wife?

Or are they more likely to contact just me?

DrSqueeze

Since the Halifax hasn't deducted any tax themselves, it's very unlikely they will be contacting HMRC. They would have no reason to, they've made the payment gross so the responsibility for paying tax (if any) has been passed to you. So at this stage, HMRC has no reason to contact you or your ex wife as they have no knowledge of the payment.

Get the Halifax to investigate whether the PPI was joint or single. If it's single (in your name) then it has nothing to do with your ex wife and she doesn't come into the situation at all. Tax matters can be resolved between you and HMRC.

If it was joint, then technically part of the refund is hers (subject, presumably, to the divorce settlement). In that case, logically part of the interest would be payable to her as well - which she may have to pay tax on, depending on her situation.

Out of interest, when the Halifax have written to you is the letter addressed just to you, or to "Mr & Mrs" ?

antdon

DrSqueeze wrote: »

Out of interest, when the Halifax have written to you is the letter addressed just to you, or to "Mr & Mrs" ?

I spoke to a not very helpfull Halifax advisor today, as I was concerned about this, as they had suggested in their letter that I send a copy of this letter to hrmc to sort the tax.

I explained that the joint names were on the letter was unacceptable, because although the account that the payments were made from was a joint account, the PPI was in my SOLE name. And that the letter should have only been addressed to me.

She insisted that if the letter was addressed to two names, then the PPI must have been held in joint names.
She then, amusingly, quoted the mortgage account number to me and insisted that it was a joint account.
She then insisted that I would have to proove otherwise.

The mortgage account she quoted was for my current mortgage, and has nothing to do with the claim (which was for the previous mortgage).

I have just spent the evening trying to find more details of the 1st mortgage, and have found the appropriate account details....
Unfortunately I cant find any details for the PPI.. Or any paperwork showing I was the Sole person on the mortgage.

But, hopefully they can find these details when I give them the correct mortgage account number.

I think I will have a go at the Halifax again tomorrow......

Otherwise I may have to just take my chances and wait till HRMC contact me...