Paying Tax on PPI Refunds

Slimming-world

Hi

I have had a PPI refund offer :j:j but it states that I will need to pay tax on the interest:eek::eek:, firstly can anyone tell me if this is correct? and secondly if it is (knowing my luck it is ) how do I pay this?

Many thanks

dunstonh

firstly can anyone tell me if this is correct?

it is.

how do I pay this?

it is deducted from the redress payment. You are issued a certificate of interest paid and if you are a higher rate taxpayer, you declare it under self assessment.

Slimming-world

dunstonh wrote: »

it is.



it is deducted from the redress payment. You are issued a certificate of interest paid and if you are a higher rate taxpayer, you declare it under self assessment.

Thank you for your reply

I the letter it states that I must pay this directly, I am not a higher rate tax payer I pay the usual tax.

Sorry for being thick!:eek:

dunstonh

Wait until you get the redress and breakdown. That should tell you how much exactly is subject to tax and how much has been deducted. If none has been deducted at source then you have to let HMRC know.

Slimming-world

dunstonh wrote: »

Wait until you get the redress and breakdown. That should tell you how much exactly is subject to tax and how much has been deducted. If none has been deducted at source then you have to let HMRC know.

Thank you, I have been sent the break down I just need to sign the form and send it back.
I have the break down of how much interest I am being refunded, so just so I have a rough idea how much I need to pay the HMRC is it about 20%

di3004

Congratulations on your success!:beer:

DrSqueeze

Slimming-world wrote: »

I have the break down of how much interest I am being refunded, so just so I have a rough idea how much I need to pay the HMRC is it about 20%

Yes, you pay 20% of any 'untaxed interest'.

Remember you don't pay tax on the refunded premiums, or on the refund of any interest which you paid to the lender.

Slimming-world

DrSqueeze wrote: »

Yes, you pay 20% of any 'untaxed interest'.

Remember you don't pay tax on the refunded premiums, or on the refund of any interest which you paid to the lender.

Thank you for your reply

I have been offered a refund of £7,700 :eek::eek: far more than I expected
I have added up the interest and it come just under £3,900 so that roughly £800 I will need to pay the tax man :rotfl::rotfl:

Sorry if this is a daft question (I have only ever paid tax through my salary) do I just ring the tax office or do I need to complete a form or do I have to wait until the end of the tax year and pay the amount then???

thanks in advance

kittiej

Are you sure that's correct because I had £3500 back and the amount subject to tax was £200 (so 20% of £200)

Derwent

Slimming-world wrote: »

Thank you for your reply

I have been offered a refund of £7,700 :eek::eek: far more than I expected
I have added up the interest and it come just under £3,900 so that roughly £800 I will need to pay the tax man :rotfl::rotfl:

Sorry if this is a daft question (I have only ever paid tax through my salary) do I just ring the tax office or do I need to complete a form or do I have to wait until the end of the tax year and pay the amount then???

thanks in advance

You are only liable for tax on the 8% simple interest part of your refund. The rest of it is a refund of your own money and so not taxable.

DrSqueeze

Slimming-world wrote: »

I have been offered a refund of £7,700 :eek::eek: far more than I expected
I have added up the interest and it come just under £3,900 so that roughly £800 I will need to pay the tax man :rotfl::rotfl:

Just be sure to double check the figures carefully.

Remember you are NOT taxed on interest they refund to you. You are only taxed on the new interest they pay to you. Their breakdown should make the difference clear.

Sorry if this is a daft question (I have only ever paid tax through my salary) do I just ring the tax office or do I need to complete a form or do I have to wait until the end of the tax year and pay the amount then???

There's no such thing as a daft question. Telephone or write to them and they'll let you know what you need to do.