PPI Refund - Taxable?

Mister-S_2

Hi,

I received a letter yesterday from HSBC informing me that my PPI claim had been upheld, and that I can expect around £6,800.
However, it also said that this may be taxable and that I would need to declare on a tax return.

Does anyone know if this is true?

Thank you

dunstonh

Does anyone know if this is true?

Yes it is.

Interest payments in the UK are taxable under HMRC rules. Typically, part of your redress payment will include some element of interest and that will therefore be taxable.

Derwent

Only the 8% simple interest element is taxable, the other 2 elements (PPI premiums and associated interest paid) are a refund of your own money and so are not taxable as they are not a gain.

smitchy73

As the others have said yes it is taxable, if you're self employed or normally fill in a tax return you tell them through that, if you're working you need to tell them that and they should adjust your tax code accordingly, if you don't work I think they'll want it in a one off payment.

If you don't report it to HMRC, I believe as I think dunston above is that HMRC will ask the banks to whom they have paid the interest too, and they could come after you and fine you for non disclosure of the income.

However, find out if they are paying the interest to you gross or net, if it's gross you pay the tax, and net is that it's already been deducted.

Hope this helps.

swashp

Thanks for the advice folks, much appreciated

magpiecottage

HSBC will normally give a certificate of interest paid showing how much the taxable interest is and how much, if any, tax was withheld.

The_Marksman

magpiecottage wrote: »

HSBC will normally give a certificate of interest paid showing how much the taxable interest is and how much, if any, tax was withheld.

Ive read & re-read my Egg figure letters & they do not mention TAX or if the amounts re-paid are NET or GROSS, any idea's anyone?

Many thanks