Successful ppi claim, now taxed?

keancy70

We have put a ppi claim in against our bank in April 2011, two weeks ago we finally had the decision of the Bank which was in our favour.
We were offered £4679 which we accepted and the Bank said we would receive a check for this money, they would cancel the PPI and then refinance the remainder of the Loan.
The paperwork also stated we would possibly have to pay tax on this amount and it would be our responsibility to look into this.
This morning when I checked our online banking there had been a payment of £4053 from our Bank, which is £626 short of what they have offered, gone into our Account.
We have had no letter and no explanation as to where the £626 pound have gone and I can only assume we have been taxed here??
Surely we should have been informed in writing this was going to be the case?? I am disgusted at the Bank for their lack of communication at this point.
Can anyone advise on this please?

DrSqueeze

Stage one is to contact the bank and ask them to explain.

keancy70

We intend to do that today after work

Thanks though, I basically just wanted to know if it's right to be taxed on this money and that large an amount?

DrSqueeze

You should only be taxed on the interest part of the payment, not the refund itself. Normally it's taxed at 20% (unless you're a higher rate taxpayer). Did they give you a breakdown of the figure, then you can check whether the amount 'deducted' is 20% of that.

If the £626 really is tax, then the interest part of your offer should be around £3130.00.

keancy70

We have not had anything other then the original letter that offered us the £4679, we have not had anything to explain a breakdown but the original letter stated that Tax may be payable and it was down to us to look into and pay hence why we have no idea why they have paid that much less.

To say we are not happy at this point would be an understatement.

But until we are home from work later and can call them we are in the dark. Just wanted to know where we stand before I scream down the phone at someone.

DrSqueeze

I'm not surprised you're unhappy - how on earth do they expect you to work out your tax situation if they don't bother to tell you how much the interest was?

I'd insist on a full breakdown of how they arrived at their figures so you can check their other calculations.

keancy70

Thank you

roonaldo

It won't be tax.

Have you gone into arrears?

keancy70

Never been in any arrears no