Tax on PPI 28 January 2012 at 2:52PM edited 30 November -1 at 12:00AM in Reclaim PPI & Other Insurance 15 replies 2.5K views

ndi149

Was trying to be helpful to my mum regarding the tax that she needed to pay to the taxman from the money she's received from the bank for her PPI claim.

I thought it was better she went to them instead of them coming to her.

She's called Barclays to confirm some details and they've said to her because the money was paid into her current account she wouldn't be liable to pay any tax. Apparently, because her current account isn't an interest bearing account, she doesn't have to pay anything.

Has anyone heard anything along the same lines?

McKneff

You dont pay any tax on a refund. When they sent the refund did it include any interest from Barclays.

This is the only thing that any tax would be due on, if she is a tax payer that is.

There is nothing to stop her putting into an ISA, where no interest would be payable anyway.

Or tell her to get herself on a cruise with it..............

ndi149

sorry, what I should have said was the tax on the interest she's receiving.

I worked it out as being about £500, she'd have to pay to the tax man, but if it looking like she doesn't, even better.

She's in a 60s, so don't want her being stressed out by the likes of the taxman trying to get cash off her if we can contact them first.

Thanks anyway - I guess I can tell her to enjoy spending :-)

BoGoF

ndi149 wrote: »

She's called Barclays to confirm some details and they've said to her because the money was paid into her current account she wouldn't be liable to pay any tax. Apparently, because her current account isn't an interest bearing account, she doesn't have to pay anything.

Has anyone heard anything along the same lines?

That advice from Barclays is not correct. Regardless of where the payment is made to the 8% interest element of the refund is taxable.

dilus

BoGoF wrote: »

That advice from Barclays is not correct. Regardless of where the payment is made to the 8% interest element of the refund is taxable.

Agree with BoGoF, if the 8% interest was paid GROSS it is taxable, if your mother is a tax payer. You need to clarify this with Barclays otherwise she could end up with a tax bill AFTER she has spent it

bandofbrothers

One of the first things i did was contact the HMRC and arrange for the amount to be taken in instalments from my tax code via my employer.

Im sure many have chosen not to declare the 8% tax which is a chance they are willing to take regarding tax evasion.

I_keep_forgetting_my_name

BoGoF wrote: »

That advice from Barclays is not correct. Regardless of where the payment is made to the 8% interest element of the refund is taxable.

That is actually disgusting as someone tell me where I can get 8% interest on Savings. Plus any tax payer unless they had used all their allowance would no doubt have put it in at least a cash ISA, the highest rate at the moment seems to be 3.1%
Seems HMRC win whatever.
which hardly seems fair in the current climate.
Are these rates ever adjusted to take into current climates or are they set in stone 10 years ago when all was well?
Thanks
I am trying to help a friend with totally missold PPI considering she told them she had just been diagnosed with a terminal cancer . The sales person said But You haven't told me that. then went ahead and did some other things which proved he took that into account. She is distraught at all of this.

tifo

I_keep_forgetting_my_name wrote: »

That is actually disgusting as someone tell me where I can get 8% interest on Savings.

Seems HMRC win whatever.

Well, no. EVERYONE has to pay tax on income, even pensions.

If you EARN money with interest, why should you be exempt from tax?

ndi149

Thank you, for all the comments, spoken to my mum and I'm going to help her put together a letter to the HMRC.

I completely think it's better to be honest with the Inland Revenue about it, even though it's a bit of cheek.

thanks

BoGoF

For those in a similar position, and thinking of not telling HMRC then just bear in mind financial institutions are obliged to tell HMRC of interest paid.

Still don't understand what's 'cheeky' about paying tax on something that is way over and above your financial loss.

ndi149

I appreciate your help, and as I explained we always intended to tell the Inland Revenue. It was actually Barclays that told us any different.

I believe we are one of the people that were going to do the right thing.

What's cheeky, is that we still have to do the running arounnd, to make sure we are following the letter of the law, by chasing the taxman ourselves to tell him what we think owe him.

Please don't make us out to be bad people.