Tax on PPI offer for an old loan without paperwork

NN12

I understand that tax is due on the 8% added interest figure separately identified in the offer letter. However, I have been offered £1,200 from Lloyds on a loan from the 90s which paperwork cannot be found and am unsure of the tax position. The offer and is made ‘to bring the matter to close’ and doesn’t mention any split between premiums and interest, therefore it's difficult to understand how much of the £1,200 is taxable.

Any ideas?

dilus

NN12 wrote: »

I understand that tax is due on the 8% added interest figure separately identified in the offer letter. However, I have been offered £1,200 from Lloyds on a loan from the 90s which paperwork cannot be found and am unsure of the tax position. The offer and is made ‘to bring the matter to close’ and doesn’t mention any split between premiums and interest, therefore it's difficult to understand how much of the £1,200 is taxable.

Any ideas?

Hi NN12, I have the same problem, received a cheque from MBNA for redress but no breakdown letter, which they say they sent earlier. Only option is to phone them and ask for a copy of the breakdown

NN12

Thanks for the reply dilus.

With the loan being so old they do not hold the paperwork and have therefore made an offer to settle the claim based on the average claim payout, this being £1,200.

Typically you'd get a breakdown into 2 or 3 parts according to your individual circumstances (premium paid, interest paid & 8% added interest). However with an average claim payout, they've just quoted £1,200 and no breakdown. I'm not sure how the tax would work on such an offer.

ALIBOBSY

If they have termed it a "goodwill gesture" in the letters and refuse to give a breakdown then it would be all untaxable.

But you need to double check with them, as if they are talking about an average figure surely they can give a breakdown?

Ali x

NN12

ALIBOBSY wrote: »

If they have termed it a "goodwill gesture" in the letters and refuse to give a breakdown then it would be all untaxable.

But you need to double check with them, as if they are talking about an average figure surely they can give a breakdown?

Ali x

Thanks Ali.

The letter doesn't mention a goodwill gesture, just an offer to bring the complaint to a conclusion.

The letter says £1,200 is based on the average payment although I think I read somewhere that £1,200 is a FOS recommended amount where paperwork can't be found - might be wrong though.

I've received another offer from Lloyds, this has a breakdown and also mentions tax may be due on the interest, however the £1,200 letter doesn't mention anything about this at all.

I'll check with Lloyds but am not hopeful of a breakdown....