PPI 8% Interest and the Inland Revenue

bandofbrothers

Hi Guys and Gals,

Received my payout a week ago.

Ive just actually fully read the letter that came with the acceptance letter which has a breakdown of the redress. Im guilty of skipping to the exciting part of the actual amount !

8% Interest was £1600.00.

Seems a paragraph I missed talks about that I may have to declare this gross amount to the inland revenue.

After reading some threads on the net it looks like I'm owing 20% of the £1,600 to the Inland revenue which is a little over £320.00.

So my question is........ has everyone declared ?

How would they know what I've been paid ?
Do the banks tell them ?
Would they ever find out ?

Would the inland revenue adjust my tax code to take the £320 from me through my wages over a period of time or would I have to send them a cheque etc ?

bandofbrothers

52 views and no replies !

Im not from the Inland revenue..........honest !

smitchy73

Hi Bandofbrothers,
Yes you have to declare it.
The banks will no doubt submit something to HMRC of all Gross payment of interest which will then be matched against who has came forward to pay.

My view is the banks will either submit it themselves or HMRC will ask them for a list of all those paid out gross and they will investigate each one, if you don't phone and arrange it yourself you could find yourself in hot water as you could be fined for non disclosure.

You will find that some lenders will pay it for you and take it off your redress, other don't, we had it with Clydesdale Bank a few weeks ago, phoned up, advised them, no problems whatsoever, they changed the tax code, advised employer who instigated the change, the first payment was the worst as it went back to the beginning of the tax year, but now it's about £15 per month till the end of the current tax year, and on the good side my lump sum was bigger as it includes the 20% tax that would've been due to be paid to HMRC.

Best advice is to be honest and upfront with them and you won't have any problems, i'm sure there are other out these who chose not to advise HMRC and these people will be the ones in a few months coming on here whining about a tax bill for all of this. Keep copies of all the paperwork too.

Oh if you are self employed you need to include this on your self assessment form, but don't know much more than that, but I'm sure you're accountant would help in this case.

Hope this helps and I'm happy to be the first to reply, sometimes others wont reply because they're not sure about the info they hold, I just speak from previous experiences.

bandofbrothers

smitchy73 wrote: »

Hi Bandofbrothers,
Yes you have to declare it.
The banks will no doubt submit something to HMRC of all Gross payment of interest which will then be matched against who has came forward to pay.

My view is the banks will either submit it themselves or HMRC will ask them for a list of all those paid out gross and they will investigate each one, if you don't phone and arrange it yourself you could find yourself in hot water as you could be fined for non disclosure.

You will find that some lenders will pay it for you and take it off your redress, other don't, we had it with Clydesdale Bank a few weeks ago, phoned up, advised them, no problems whatsoever, they changed the tax code, advised employer who instigated the change, the first payment was the worst as it went back to the beginning of the tax year, but now it's about £15 per month till the end of the current tax year, and on the good side my lump sum was bigger as it includes the 20% tax that would've been due to be paid to HMRC.

Best advice is to be honest and upfront with them and you won't have any problems, i'm sure there are other out these who chose not to advise HMRC and these people will be the ones in a few months coming on here whining about a tax bill for all of this. Keep copies of all the paperwork too.

Oh if you are self employed you need to include this on your self assessment form, but don't know much more than that, but I'm sure you're accountant would help in this case.

Hope this helps and I'm happy to be the first to reply, sometimes others wont reply because they're not sure about the info they hold, I just speak from previous experiences.

Thank you for your reply.

I've worked out that I owe approx £320 to the tax boys so I don't see the hit being big from that amount. Its a pity I can't just pay the £320 back by debit card etc !

Ill give them a ring on Monday as I'm one of those who would lose sleep over worrying what the morning post would bring !!

I have the breakdown from the bank but would the tax man just take my word about the amount of the 8% interest ?

smitchy73

bandofbrothers wrote: »

Thank you for your reply.

I've worked out that I owe approx £320 to the tax boys so I don't see the hit being big from that amount. Its a pity I can't just pay the £320 back by debit card etc !

Ill give them a ring on Monday as I'm one of those who would lose sleep over worrying what the morning post would bring !!

I have the breakdown from the bank but would the tax man just take my word about the amount of the 8% interest ?

With us my OH just gave her the total gross amount of the simple interest, telling her she had made a successful ppi reclaim, she was happy to pay it over the year, you could ask if you could pay it in a one off payment in which case wait till you have the money. Don't know what they'll say to that though!:D

dizzeeblondee

I don't work now I've had baby no2......and the 8% iinterest is only a few hundred pounds off the top of my head....what do I do about the tax bit?

I've not earned anything else in this tax year apart from my final wage, which was on emergency tax(they owe me a rebate ), and won't be full stop for the rest of the year.

bandofbrothers

dizzeeblondee wrote: »

I don't work now I've had baby no2......and the 8% iinterest is only a few hundred pounds off the top of my head....what do I do about the tax bit?

I've not earned anything else in this tax year apart from my final wage, which was on emergency tax(they owe me a rebate ), and won't be full stop for the rest of the year.

In my case I'm being safe rather than sorry !

What I don't want is some sort if tax evasion biting me on the a$$ down the line.

Give them a bell like me on Monday.

DrSqueeze

The simplest way I've found was to write to HMRC, enclosing a copy of the letters from the lenders showing how much interest I have received.

HMRC replied and told me they would add it to my income for this tax year and adjust my tax code, so I can pay them as part of my normal salary deductions.

Very simple and straight forward, and I don't have to worry about anyone contacting me later.

smitchy73

dizzeeblondee wrote: »

I don't work now I've had baby no2......and the 8% iinterest is only a few hundred pounds off the top of my head....what do I do about the tax bit?

I've not earned anything else in this tax year apart from my final wage, which was on emergency tax(they owe me a rebate ), and won't be full stop for the rest of the year.

Not really sure but assuming your tax rate is 747L then this allows something like £7470 to earn before you are taxed, if you don't raise any more than that over the whole of the year then you shouldn't pay any tax on it at all. best advice just ring them or as one of the others posted write to them with the information.

bandofbrothers

Well I've spoken to the Inland Revenue office today.

They will temporarily change my tax code in order to allow me to pay the £320 over the rest of the year.

I'm happy as I would be the unlucky one being chased for tax evasion !

DrSqueeze

bandofbrothers wrote: »

Well I've spoken to the Inland Revenue office today.

They will temporarily change my tax code in order to allow me to pay the £320 over the rest of the year.

I'm happy as I would be the unlucky one being chased for tax evasion !

Glad you're sorted :beer: