Tax and PPI refunds?

berkshirelady

hi there,

in my letter from Lloyds TSB confirming a PPI refund, there's a sentence quite far down in the letter that says about paying tax on 'this interest' and that I might need to contact my tax office to see if I am liable for tax. I texted a mate to tell her my good news and her reply was 'don't forget you'll have to pay tax on it'. OK, the fact that I was expecting a simple 'well done!' is beside the point :-), but apparently the overall refund includes interest too?

The letter isn't very clear, so I'm wondering, am I liable for tax on the simple interest of 8% only (i.e very small amount) - or the entire refund? To my mind, being taxed on the total refund would be a tad harsh, as I already paid tax on my income before making PPI payments out of that on to my credit card account...but then nothing about HMRC would surprise me.

Can anyone advise?

thanks!
BL

dilus

berkshirelady wrote: »

hi there,

in my letter from Lloyds TSB confirming a PPI refund, there's a sentence quite far down in the letter that says about paying tax on 'this interest' and that I might need to contact my tax office to see if I am liable for tax. I texted a mate to tell her my good news and her reply was 'don't forget you'll have to pay tax on it'. OK, the fact that I was expecting a simple 'well done!' is beside the point :-), but apparently the overall refund includes interest too?

The letter isn't very clear, so I'm wondering, am I liable for tax on the simple interest of 8% only (i.e very small amount) - or the entire refund? To my mind, being taxed on the total refund would be a tad harsh, as I already paid tax on my income before making PPI payments out of that on to my credit card account...but then nothing about HMRC would surprise me.

Can anyone advise?

thanks!
BL

Just the 8% standard interest berkshirelady and don't inform them until you have it in your account

berkshirelady

dilus wrote: »

Just the 8% standard interest berkshirelady and don't inform them until you have it in your account

Thanks, Dilus, much appreciated. I thought I was going to get shafted all over again :-)

dilus

berkshirelady wrote: »

Thanks, Dilus, much appreciated. I thought I was going to get shafted all over again :-)

We wouldn't let that happen

BristolLad

Can all or some of the costs of a company employed to handle a Mis-sold PPI claim be offset against the cost of any tax liability?

dunstonh

BristolLad wrote: »

Can all or some of the costs of a company employed to handle a Mis-sold PPI claim be offset against the cost of any tax liability?

No.

Indeed, you end up paying more tax if you use a claims company as the service they provide is Vatable. Plus, they base their percentage on the gross payment and not the net payment.

kara_p_uk

Just got a refund letter from Halifax for PPI including a small payment of 113 8% interest malarky... I'm currently a full time student with no taxable income so my yearly income will be less than the personal allowance. Do I still need to declare this 113 to the taxman?

Help!

dilus

kara_p_uk wrote: »

Just got a refund letter from Halifax for PPI including a small payment of 113 8% interest malarky... I'm currently a full time student with no taxable income so my yearly income will be less than the personal allowance. Do I still need to declare this 113 to the taxman?

Help!

I don't believe so

silverknowes

hello there i have just recieved an offer from bank of scotland for missold ppi in all there are 8 refunds am i right in saying that i total all interest at 8% totals together and divide by 20% and that will be the total i owe the tax man also how do i pay this total and when



kind regards silverknowes:T:T:T:beer:

tifo

kara_p_uk wrote: »

Just got a refund letter from Halifax for PPI including a small payment of 113 8% interest malarky... I'm currently a full time student with no taxable income so my yearly income will be less than the personal allowance. Do I still need to declare this 113 to the taxman?

Yes, you would need to declare it.

Everyone has a personal allowance so as long as you're below that you won't pay any tax. In some cases the banks deduct 20% from the interest paid and in this case you would have to declare and ask for a refund if no tax is due from you.

Since we're paying tax on this 'income' we should also reclaim expenses such as stamps, letters and our time.

woodybuzz

can someone confirm whether tax is only due on the 8% interest element of the refund - or all the interest (on the refunded premiums).

I know the refunded premiums are tax free.

Thanks

Woody